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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The presumption by the employer that the employee is not interested in the job when he/she is absent from work for a long duration without the authorization of the employer, has been considered as reasonable.
The constitutional principle of ‘equal pay for equal work' has been upheld by the Supreme Court of India ("SC") with respect to temporary employees' vis-à-vis permanent employees in the government sector.
On 31 December 2015 the President gave his assent to certain amendments to the Payment of Bonus Act, 1965. The amendments have increased the wage threshold for determining applicability of the Act from INR 10,000 to INR 21,000 per month.
The Payment of Bonus Act, 1965 provides for the payment of statutory bonus to eligible employees. The bonus payable is to be determined on the basis of profits or on the basis of production or productivity of the establishment.
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