Amendment to the Payment of Bonus Act, 1965

Dear Mr. T S Shankar Deepa,

 

The Payment of Bonus (Amendment) Act, 2015 received the assent of the President on 31^st December 2015.  The Amendment Act shall be deemed to have come into force on 01^st April, 2014 i.e. with retrospective effect.

 

The major changes brought in by the amendment are as follows:

 

Existing position	Amendments	Impact
Employees eligible for bonus As per Section 2(13) of the Act, ‘employee’ means a person (other than apprentice) employed on salary or wages not exceeding INR 10,000 per month.	The limit of INR 10,000 per month is increased to INR 21,000 per month.	More number of employees brought into the ambit of eligibility for bonus.
Calculation of bonus As per Section 12 of the Act, if an employee’s salary is more than INR 3,500 per month, for the purpose of calculation of bonus, the salary will be assumed to be INR 3,500 pm.	The limit of INR 3,500 per month is increased to INR 7,000 per month or the minimum wage for the schedules employment, as fixed by the appropriate government, whichever is higher.	Increased bonus for the employees.

 

Implications on employer:

 

Employer will have the following implications due to the amendment which needs attention and action:

 

Ø  There will be additional bonus liability, as the eligible employees and eligible salary has been increased.

 

Ø  No specific dates have been notified for the payment of arrears of bonus arising due to the above.

 

Ø  As per the Act, bonus have to be paid within eight months of closing of the accounting year ( which is 31^st March 2015 in most of the cases). Hence, the employers would have paid the bonus computed as per the old limits. However, due to the amendment, the employer have to re-compute the bonus as per the new eligibility and increased limits of salary.

 

Ø  The eligible salary has been increased from INR 3,500 pm to INR 7,000 pm or minimum wage for the schedules employment, as fixed by the appropriate government, whichever is higher. Different states will have different minimum wages notified, employer operating in more than one states will have to consider this fact and compute the bonus accordingly. This may create disparities in the payment of bonus.

 

Ø  Few of the eligible employees might have left the organisation. They have to contact their past employers to claim the balance bonus. Employer has to maintain the details of such employees for indefinite period.

 

Kindly let us know for any further clarifications in this regard. In case of any help required from us, kindly feel free to let us know the same.

 

Best Regards

Vishnu Daya Alert Team

 

Vishnu Daya & Co.,

Chartered Accountants,

 

GF No.7 & 3^rd Floor, Karuna Complex, No.337,

Sampige Road, Malleswaram, Bangalore – 560003

Office: +91-80-23312779 | +91-80-23560633

[email protected]

Cell: +91-9880715963 | Fax: +91-80-23313725

Website: www.vishnudaya.com

 

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