Home Forums Personal Finance THE PAYMENT OF BONUS AMENDMENT ACT 2015

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    The Payment of Bonus (Amendment bill), 2015 received the assent of the President on 31.12.2015 and become THE PAYMENT OF BONUS (AMENDMENT) ACT, 2015 NO. 6 OF 2016. As per amended Act more workers eligible for bonus due to raising of monthly maximum pay limit.

    Earlier it is provided that the bonus payable to an employee will be in proportion to his or her salary or wage and if the salary was more than Rs 3,500 per month, the salary will be assumed to be Rs 3,500 per month for the purposes of calculation of bonus. Now this limit is increased to Rs 7,000 per month or the minimum wage notified under the Minimum Wages Act, 1948 (whichever is higher). Following are the amended provisions in brief:-

    Retrospective Effect : The amendment shall come into force retrospectively from 1st day of April, 2014. Accordingly it will impact the bonus calculations for the FY 2014-15 and the employees would be eligible for arrears. The differential amount of bonus expenditure (if any) for FY 2014-15 and also for FY 2015-16 (as per revised calculations) has to be provided for in the current financials.

    Eligible Employees : As per earlier provisions, the payment of bonus was applicable only to those employees’ whose salary or wage was up to Rs 10,000 per month. However, this has been increased to Rs 21,000 per month. With this increase, all the employees (other than an apprentice) employed on a salary or wage not exceeding Rs 21,000 per month in any industry performing any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied, shall be now eligible to receive annual bonus.

    Bonus Calculation : As per the pre amended Act, the bonus to an employee was in proportion to salary or wage. However, in case the salary was more than Rs 3,500 per month, for the purposes of calculation of bonus, it is taken as Rs 3,500 per month. The Amendment Act has raised this calculation ceiling to Rs 7,000 per month or the minimum wage notified for the employment under the Minimum Wages Act, 1948 (whichever is higher).

    This amendment has linked the bonus calculations to Minimum Wages and as such there will be different bonus ceilings and calculations across the industries as the States have different Minimum wages for different category of workers for the factories and establishments operating in that particular State. Moreover, the payment of bonus would be different to employees working in the same Company having multi-state establishments. Download The Payment Of Bonus Amendment Act 2015 NO. 6 OF 2016

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