Skip links
Customer Support
info@eadvisors.in

Send a message

    EAdvisors

    Payment of Bonus Act 1965

     

     

     

     

     

    Ratings
    Google: 4.8/5                        JustDial: 4.8/5

    We will help You!

    Name*
    This field is for validation purposes and should be left unchanged.

    Payment of Bonus Act 1965

    Know in depth about Payment of Bonus Act 1965.

    Drop Query

    Discussion with Expert

    Drafting of Application

    Issuance of Certificate

    Payment of Bonus Act 1965

    Payment of Bonus Act 1965

    INTRODUCTION

    Payment of Bonus Act 1965 is applicable to whole of India and the objective of coming up with this Act was to:-

    • Impose a legal responsibility on the employer
    • Designate the minimum and maximum percentage of bonus
    • Prescribe the formula for calculating bonus
    • Provide reasonable mechanism

    The Payment of Bonus Act 1956 provide for payment of Statutory bonus, which is different from the general term bonus. The term “Bonus” and “Statutory Bonus” are two different terms and are defined differently. Bonus is termed as a general word that denote a bonus linked to performance or productivity as an incentive or any customary bonus given on festivals. Whereas if we talk about Statutory Bonus, it is the bonus paid under the Payment of Bonus Act 1965.

    Note:- The Statutory bonus is a mandatory payment made by the law which is a right of every employee working in a factory or establishment.
    Here is everything you need to know about the Payment of Bonus Act 1965. Continue reading it to gain complete knowledge of it.

    APPLICABILITY

    The Payment of Bonus Act 1965 is applicable on every factory and every establishment having 20 or more employed. It must be noted that once it is applicable on a factory or establishment, then shall continue to fall under the Payment of Bonus Act 1965 which means the factory shall continue to pay the bonus even if the number of employees working falls below 20.

    Payment of Bonus Act 1965 once applicable, remains applicable.
    Now, there are three conditions for an employee to be eligible for availing bonus. And these three condition are as follows:-

    1. The salary or wage of the employee is upto Rs. 21,000 per month
    2. The employee is engaged in any work may it be skilled, unskilled, managerial, supervisory
    3. The employee who have worked not less than 30 working days in the same year.

    Note: The Payment of Bonus Act 1965 shall not be applicable if any employee is a defaulter or found to be dishonest, had theft, sabotage of any property or establishment, have violent behavior while on the duty within premises of the establishment.

    NON APPLICABILITY

    The Payment of Bonus Act 1965 on the follow mentioned employees, namely:-

    • Employees of the Life Insurance Company (LIC)
    • Seamen defined under clause 42 of the Merchant Shipping Act 1958
    • Employees registered or listed under the Dock Workers Act 1948 and employed by the registered of listed employers
    • Employees of any industry controlled by the Central or State Government
    • Employees from Indian red cross society or educational institutions, institutions not for profit
    • Employees employed by the contractor on building operations
    • Employees of the Reserve Bank of India (RBI)
    • Employees of any financial corporation under Section 3 or Section 3a of the State Financial Corporation Act (SFC) 1951
    • Employees of IFCI, Deposit Insurance Corporation, Agriculture Refinance Corporation
    • Any financial institution is an establishment in the public sector which the Central Government notifies
    • The employees of Inland Water Transport Establishment

    CALCULATION

    1. If basic salary plus dearness allowance is under Rs. 7000 then the bonus calculated shall be on the actual amount itself.
    2. Whereas if basic salary plus dearness allowance is greater than Rs. 7000 then bonus is calculated on Rs. 7000.

    PAYMENT METHOD

    The amount of bonus that is payable to the employee is required to be made payable only in terms of cash payment. And not in accumulation with perquisite or allowances given to the employee

    And the amount of bonus must be paid within the period of 8 months of closing of the books of accounts.
    There seems four fays in which statutory bonus can be paid. Let us discuss them one by one.

    Firstly, Advance Payment through salary:- to pay advance statutory bonus through salary, the employer is required to include this under the head of salary structure. As including under it will allow the statutory bonus to be paid automatically through payroll.

    Secondly, Advance Payment as an adhoc:- where the employee has not made its inclusion in the head of salary structure then, they can still make the payment through the Adhoc payment process.

    Third, Advance Payment in bulk:- if the employer is willing to pay the employee in advance during the year but also based on a percentage of wages then the employer can use this option.i.e. to make advance payment in bulk.

    Fourth, Arrear Payment in bulk:- while the employer can pay advance Statutory Bonus numerous time and with varying percentage, the arrear payment can be done only after his March payroll for the year confirmed.

    NON COMPLIANCE

    If any employer is found not to obey the provision of the Payment of Bonus Act 1965 then, penalty shall be charged. The one who responsible for the same shall be imprisoned for a term of six months or be liable to pay a fine of Rs. 1000 or both as the case may be.

    In case the default has been made by the company or firm or body corporate or association of individuals then, its director, partner or a principal or officer responsible for the conduct of its business, must be deemed to be guilty of that offence, unless the director, partner or principal or officer proves that the crime was committed out of knowledge or that he exercised all due diligence.

    EAdvisors
    Payment of Bonus Act 1965

    EAdvisors offers you various benefits

    No Hidden Fees

    EAdvisors is a well-known company, popular for its quality work and therefore no hidden or extra is charged by our clients.

     

    Fast and Easy

    By just sharing your documents with us on WhatsApp or email, you will get your dream company ready within 10 days only.

     

    Order Registration

    You will be given a Unique Order No. for you to track the status of company registration process. We offer this unique tracking method to given them a sense satisfaction that their work is our utmost priority. 

    Secure Payments

    Once the registration process gets started and payment is also made, it is our duty and responsibility to keep your payment secure and in return registering your company.

    Use Local Currency

    Being a company established in India, we will be accepting the payment in Indian Currency through any of the online mode of transfer.

    Intelligent Working method

    As the world is also getting advance within time, we have also established online way of accepting documents and creating your company.

    Answer to your queries

    Payment of Bonus Act 1965

    The minimum bonus of 8.33% is payable that can be paid by every industry and establishment.
    The maximum bonus shall not exceed 20% of the salary /wage of an employee.

    The maximum limit for bonus allowed is 20% of the salary or wage earned by an employee during an accounting year for payment of maximum bonus.

    As per Payment of Bonus Act 1948, the employees receiving a salary or wages up to Rs. 21,000 per month is eligible to opt for bonus. Also, the employee engaged in work may it be skilled or unskilled or managerial or supervisory etc are eligible for bonus. The employee who have worked not less than 30 working days in the same year are also allowed to gain bonus.

    BEST

    Client Reviews

    EAdvisors

    EAdvisors has served many business houses and individuals from India as well from outside India. Why don’t you try our services and become part of best online business consultancy portal?

     

    🍪 This website uses cookies to improve your web experience.