According to Section 8 of the Payment of Bonus Act, every employee shall be entitled to the bonus to be paid by his employer in an accounting year in accordance with the provisions of this Act, provided that the employee should have worked in the establishment for not less than thirty working days in that year.
To whom Bonus act is applicable
The Payment of Bonus Act, 1965 applies to the following categories of employees:
Workers Who Attend the Factory Premises Are Entitled to Bonus Under the Bonus Act
The Hon’ble Allahabad High Court in the matter of Kale Khan Mohammad Hanif vs. Jhansi Bidi Mazdoor Union, 1980 Lab IC 1973 has laid down the settled principle of law that workers who have the option to attend work at the factory premises are entitled to a bonus. The Court further held that it is true that on any particular day, they may choose to attend to the work at the premises of the factory or not. Still, nonetheless, they were employees of the petitioner within the meaning of the Bonus Act since, on those days on which they did work, they worked under the control and supervision of the petitioner.
The mere fact that the payment was on daily wages did not affect their status as employees. Hence, any person who works at the factory will be entitled to a Bonus under the Bonus Act.
Seasonal Workers Are Entitled to Bonus Under the Bonus Act
The Hon’ble Bombay High Court in the matter of J.K. Ginning & Pressing factory v P.O. 2nd Labour Court (1991) 62 FLR 207 has laid down the settled principle of law that the seasonal worker is entitled to a bonus under bonus act, provided that he should work for more than thirty days.
The Court further held that under Section 8, which relates to the eligibility for a bonus, the only requirement is that the employee should have worked in the establishment for not less than thirty working days in an accounting year. In the present case, the claimants had put in more than thirty working days in an accounting year; it would be highly inequitable to grant a bonus to a worker who had put in only thirty days and allow a bonus at the same rate to another worker who may have worked for a considerably longer period.
Now, if the Legislature has determined the eligibility for bonus by an express provision, it would not be permissible to import these considerations while interpreting the provision relating to eligibility.
Other Factors to Be Considered for Bonus
According to section 10 of the payment of bonus act, the employer is obliged to pay every employee for that accounting year commencing after the year 1979 and thereafter, every subsequent year, the minimum bonus shall be 8.33% of the net salary of the employee of One Hundred rupees whichever is higher irrespective of the fact that the employer has any allocable surplus in the accounting year.
For Employees Below Fifteen Years
Under Section 10 of the payment of bonus act, when an employee has not completed the age of fifteen years at the beginning of the accounting year, the employer has to pay either 8.33 % of the employee's net salary or sixty rupees, whichever is higher.
Disqualification for Bonus
According to section 9 of the Bonus Act, an employee shall be disqualified from receiving a bonus if he is dismissed from service due to below-mentioned act:
- riotous or violent behavior while on the premises of the establishment; or
- theft, misappropriation, or sabotage of any property of the establishment.
The Bar of Disqualification is Clear and Unequivocal
The Hon’ble High Court of Andhra Pradesh has laid down the settled principle of law in the matter of KLJ Plastics Ltd vs. Labour Court –III, Hyderabad, (2002) 3 LLJ 619 Bom. that the bar of disqualification for bonus is clear and hence, the distinction cannot be drawn from this particular provision. The Court further held that object of the Act also, in my considered opinion, the bar of disqualification for bonus imposed under Section 9 of the Act is a clear and unequivocal bar. If the wording of the provisions also is carefully gone through, a distinction cannot be drawn between the bonus payable subsequent to the order of termination or prior to the order of termination, and the bar applies to the bonus as such payable under the Act.
Bonus Can Be Denied on That Accounting Year, in Which Employee Committed Fraud
The Hon’ble Karnataka High Court has laid down the settled principle of law in the matter of Himalaya Drug Co. Makali vs. 2nd Additional Labour Court, (1986) 52 FLR 704 that the bonus shall be forfeited on for that accounting year in which the employee has committed fraud. The Hon’ble High Court further construed that the right of the management to forfeit bonus on the ground that the workman was dismissed from service for misconduct, more particularly mentioned in Section 9 of the Act, would be only with reference to the accounting year in which the said act of misconduct was committed and not with reference to any year or years preceding or succeeding the accounting year in question.
ACCOUNTING YEAR- Section 2 (i)
In relation to a corporation, the accounting year has been defined as the year ending on the day on which the books and accounts of the corporation are to be closed and balanced.
In relation to a company, the accounting year has been defined as the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not;
in any other case—
the year commencing on the 1st day of April; or
if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced.