Payment of Bonus under The Payment of Bonus Act,1965

The payment of Bonus Act, 1965, extends to the whole of India. This Act shall be applicable to:

1. every factory; and
2. every other establishment in which twenty or more persons are employed on any day during an accounting year.

The appropriate Government can give 2 months notice of its intention, by notification in the Official Gazette, to apply the provisions of this Act to any establishment or class of establishment employing such number of persons less than twenty but shall in no case be less than ten. The provisions of this Act can be applied to such establishments with effect from such accounting year as may be specified in the notification.

The provisions of this Act shall be applicable to a factory or other establishment in respect of the accounting year commencing on any day in the year 1964 and in respect of every subsequent accounting year. For the State of Jammu and Kashmir, the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year shall be construed as reference to the accounting year commencing on any day in the 1968 and every subsequent accounting year.

Provided further that when the provisions of this Act have been made applicable to any establishment or class of establishments by the issue of a notification, then the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year shall be construed as a reference to the accounting year specified in such notification and every subsequent accounting year. An establishment to which this Act applies shall continue to be governed by this Act even if the number of person employed therein falls below twenty or the number specified in the notification.

Where an establishment consists of different department or undertakings or has branches, whether in the same place or in different places, all; such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act.

Payment of Bonus

Bonus is a sum of money given in addition to regular wages to an employee in appreciation of his good work and good performance. The employee receives this bonus from his employer under the Payment of Bonus Act, 1965. The calculation of bonus is as follows:

Minimum bonus – Minimum bonus is 8.33 % of the salary or wages of an employee or Rs. 100 in case of employees above 15 years of age and Rs 60 in case of employees below 15 years of age. Maximum Bonus – When the allocable surplus exceeds the minimum bonus, the employer should pay bonus in proportion to the salary or wages earned by the employee subject to a maximum of 20% of such salary or wages.

In some special cases where the salary or wage of an employee exceeds Rs. 1600/- per month, minimum or maximum bonus payable to such employee shall be calculated as if his salary or wage were Rs. 1600/- per month.