In December 2015, the Indian Lok Sabha introduced a bill to the Payment of Bonus Act, 1965 that proposes to raise the monthly wage eligibility limit of employees to INR 21,000 per month from INR 10,000. The objective of this Bill is to bring more employees under the coverage of the Act so that they can avail of the benefit that the Act provides. Upon recently receiving the assent of the President of India, the Bill has become- The Payment of Bonus (Amendment) Act, 2015 and the said act has retrospective effect, i.e., it is deemed to have come into effect from April 1, 2014.
The Payment of Bonus Amendment Act, 2015 also enhances the monthly bonus calculation ceiling to INR 7,000 per month from INR 3,500, thereby increasing the quantum of bonus significantly.
The Payment of Bonus Act 1965 is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year. The Act provides for annual payment of bonus to employees of certain establishments. Under the Act, bonus is calculated on the basis of the employee's salary and the profits of the establishment.
As per the Act, where the salary or wage of an employee exceeds Rs 3,500 per month, the minimum or maximum bonus payable to employees is calculated as if his or her salary or wage were Rs 3,500 per month. The Amended Act raises the ceiling for calculation of bonus to INR 7,000 per month or the minimum wage notified, from INR 3,500 per month.
These amendments were assured by the Central Government after some 10 central trade unions went on a one-day strike on September 2, 2015. These changes are in response to and in line with the demand of the trade unions.
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