Payment of Bonus Act - India
3
THE PAYMENT OF BONUS ACT, 1965
Learning Objectives
In this Chapter, the students will understand the♦ Applicability and non-applicability of the Act to certain classes of establishments and employees ♦ Computation of profits for the purpose of calculation of allocable and available surplus for the purpose of determination of bonus
♦ Set on and Set off of allocable surplus
♦ Percentage limits for minimum and maximum bonus
♦
Other miscellaneous provisions
3.1 Introduction
This is an Act intended to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith. It came into force from September 25, 1965. It extends to the whole of India. Unless it is provided otherwise in the Act, it shall apply to : (a) every factory, and (b) every other establishment in which 20 or more persons are employed on any day during an accounting year. But the appropriate Government may apply the provisions of the
Act with effect from such accounting year as may be notified in the Gazette to any establishment or class of establishments [including an establishment as defined by Section
2(m) (ii) of the Factories Act,1948] employing persons less than 20 but not less than 10 in number [Proviso to Section 1(3)].
An establishment in which 20 or more persons are employed on any day during an accounting year, must continue to be governed by this Act, in spite of the fact that the number of persons employed therein falls below 20.
A part-time employee is also an employee for the purpose of calculating the number of employees i.e., 20 or more under Section 1(3)(b).[ Automobile Karamchari Sangh Vs.
Industrial Tribunal,(1976)38 FLR 268(All)]
© The Institute of Chartered Accountants of India
The Payment of Bonus Act,1965
3.2 Act not to Apply to certain classes of Employees (Section 32)
The following are the categories of employees who are excluded from the operation of the
THE PAYMENT OF BONUS ACT, 1965
Learning Objectives
In this Chapter, the students will understand the♦ Applicability and non-applicability of the Act to certain classes of establishments and employees ♦ Computation of profits for the purpose of calculation of allocable and available surplus for the purpose of determination of bonus
♦ Set on and Set off of allocable surplus
♦ Percentage limits for minimum and maximum bonus
♦
Other miscellaneous provisions
3.1 Introduction
This is an Act intended to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith. It came into force from September 25, 1965. It extends to the whole of India. Unless it is provided otherwise in the Act, it shall apply to : (a) every factory, and (b) every other establishment in which 20 or more persons are employed on any day during an accounting year. But the appropriate Government may apply the provisions of the
Act with effect from such accounting year as may be notified in the Gazette to any establishment or class of establishments [including an establishment as defined by Section
2(m) (ii) of the Factories Act,1948] employing persons less than 20 but not less than 10 in number [Proviso to Section 1(3)].
An establishment in which 20 or more persons are employed on any day during an accounting year, must continue to be governed by this Act, in spite of the fact that the number of persons employed therein falls below 20.
A part-time employee is also an employee for the purpose of calculating the number of employees i.e., 20 or more under Section 1(3)(b).[ Automobile Karamchari Sangh Vs.
Industrial Tribunal,(1976)38 FLR 268(All)]
© The Institute of Chartered Accountants of India
The Payment of Bonus Act,1965
3.2 Act not to Apply to certain classes of Employees (Section 32)
The following are the categories of employees who are excluded from the operation of the