One of the last legislative acts (and indeed, one of the few) during the recently concluded Winter Session was the passage of the Payment of Bonus (Amendment) Bill 2015 in both Houses of the Parliament.
The Payment of Bonus Act 1965, enacted in pursuance of recommendations of the Tripartite Bonus Commission appointed in 1961, provides a statutory formula for payment of bonus as a statutory right to share in the surplus profits, to employees in certain establishments. Before this Act, bonus was regarded only as a mere gratuitous payment by his employer to employees. But the Act turned it into a statutory right, albeit subject to several qualifications. The Amendment Bill seeks to further expand the scope of the rights available under this statute.The full text of the Bill can be found here.
The main features of the Amendment Bill include:
Calculation of
Bonus
Under the
formula provided by the Act, bonus is calculated on the basis of the
employee’s salary and the profits of the establishment. Bonus is
payable in terms of 8.33% of an employee's wage. But this is subject
to the rule that where an employee’s salary is more than Rs 3,500
per month, the bonus would be calculated as 8.33% of Rs. 3500. In
other words, the maximum salary assumed will be Rs. 3500 per month. The Bill seeks
to raise 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).
Raise in Wage
Ceiling
The Act
currently places an exclusionary wage ceiling of Rs 10,000 per month.
Any employee earning more than this amount is not entitled to receive
bonus under the statute. The Bill aims to increase this ceiling to Rs
21, 000.
Retrospective
Effect
Interestingly,
the Bill provides for retrospective effect and the enhanced bonus and
coverage would be deemed to be applicable from April 1, 2014. The Bill when introduced proposed that the Amendment shall come into effect from April 1, 2015. But the Lok Sabha has pushed the date of retrospective application further back to 2014. This is a major concession for the workers.
The proposed
changes, are among the few rare pro-worker provisions, suggested as
part of the whole package of labour reforms planned by the Union
Government. It would lead not only to a significant increase in the
quantum of bonus but also expand the coverage of employees.Therefore, it was expected that the Bill would be warmly received by trade unions and workers.
Nonetheless,
not everyone is pleased with the Amendment Bill. Anumeha Yadav has
this fine report on Scroll on why the changes proposed by the
Amendment Bill are inadequate. As the report indicates, an expansion of statutory right for
directly employed workers is, at best, only marginally relevant in an
industrial context where use of contract labour has become the
standard practice. Further, this right is more an illusion than
reality even for workers are nominally covered by the Act, for
receipt of bonus is often a determinant of the extent and strength of
their organisation and not formal legal rights.
