Page 149 - DCOM207_LABOUR_LAWS

Labour Laws

Notes done by employees under a contract, express of implied (India Hume Pipe Company. v. E.M.
Nanavutty 48 Bombay L.R., 551).

Example: The Supreme Court also held in the case of Associated Cement Co. Ltd. v.
Their Workers, A.I.R. 1959 S.C. 967 that it is fair and just that labour should derive some share in
the surplus available after meeting necessary prior charges.

9.1.2 Objectives of this Act

Following are the objectives of this Act:

l z To improve statutory liability to pay bonus reward for good work in case of profits or
losses.
l z To prescribe formula for calculating bonus
l z To prescribe minimum & maximum percentage bonus

l z To provide of set off/set on mechanism
l z To provide redressal mechanism
9.1.3 Key Provisions

The key provisions of the Act are:-
l z According to the Act, the term ‘employee’ means “any person employed on a salary or
wage not exceeding three thousand and five hundred rupees per mensem in any industry
to do 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”.
l z An employee is entitled to be paid by his employer a bonus in an accounting year subjected
to the condition that he/she has worked for not less than 30 working days of that year.

l z An employer shall pay minimum bonus at the rate of 8.33% of the salary or wages earned by
an employee in an year or one hundred rupees, whichever is higher. Here it is not required
that the employer has any allocable surplus in the accounting year. However, where an
employee has not completed fifteen years of age at the beginning of the accounting year,
the minimum bonus payable is 8.33% or sixty rupees, whichever is higher.

l z In any accounting year, if the allocable surplus exceeds the amount of minimum bonus
payable to the employees, the employer shall in lieu of such minimum bonus, be bound to
pay bonus (maximum bonus) equivalent to the amount which shall not exceed 20% of the
salary or wages earned by employees.
l z In computing the allocable surplus, the amount set on or the amount set off shall be taken
into account. In other words:- (i) If, in any accounting year, the allocable surplus exceeds
the amount of maximum bonus payable to the employees in the establishment, then the
excess surplus is carried forward for being set on in the succeeding accounting year and so
on up to and inclusive of the fourth accounting year for the purpose of payment of bonus;
or (ii) If there is no or less allocable surplus in respect of that year, then such a shortfall is
carried forward for being set off in the succeeding accounting year and so on up to and
inclusive of the fourth accounting year.

l z Where in any accounting year, any amount has been carried forward and set on or set off,
then in calculating bonus for the succeeding accounting year, the amount of set on or set off
carried forward from the earliest accounting year shall first be taken into account.

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