ABSTRACT

ON

LAW RELATING TO PAYMENT OF BONUS

SUBMITTED BY- RACHIT GUPTA


500012425


R450210091


SECTION-B, B.A.LLB

AIM

The payment of bonus act was formed with the objective of rewarding the
employees for their good work for the establishment. It is a way by which
the establishment shares the prosperity with its employees. The objective
of this act is to improve statutory liability to pay bonus, to prescribe a
formula for calculating the bonus, to provide set off/ set on mechanism
etc. The payment of bonus is dealt under the act PAYMENT OF BONUS ACT,
1965. There are various matters which are covered under this act such as
Applicability, Eligibility, Calculation of bonus etc. This act deals with
payment of bonus to the workers if there are more than 10 members employed
in a establishment with the aid of power or if there are more than 20
persons employed in a establishment without any aid are to be given bonus
on a compulsory basis. There are various establishments which are not to be
covered under the preview of this act like LIC, UNIVERSITY AND OTHER
EDUCATIONAL ESTABLISHMENT, FINANCIAL CORPORATION etc.

This act also has some other provisions like the condition under which
payment of bonus is not to be done, calculation of bonus of certain kind of
employees, power of inspector, offences and penalties etc. The act
specifically deals with the issue of bonus. The act also deals with the
calculation of gross profit in the case of a banking company under section
4(a) First schedule and calculation of gross profit in the case of non
banking company which is covered under section 4(b) Second schedule.











SYNOPSIS



The points covered under this project are like:-

1. APPLICABILITY OF THE ACT



The act applies where there are 10 or more person employed in a
establishment with the aid of power or where 20 or more persons are
employed in a establishment without the aid of power.



1. ESTABLISHMENT



The establishment includes departments, undertakings and braches etc.



1. COMPUTATION OF AVAILABLE SURPLUS:

These sums shall be deducted from the gross profits as prior charges.

(a) any amount. by way of depreciation admissible in accordance with the
provisions of sub-section (1) of section 32 of the Income-tax Act, or in
accordance with the provisions of the agricultural income-tax law

(b) any amount by way of (development rebate or investment allowance or
development allowance) which the employer is entitled to deduct from his
income under the income-tax Act;

(c) subject to the provision of section 7, any direct tax which the
employer is liable to pay for the accounting year in respect of his income,
profit and gain during that year;



1. COMPONENTS OF BONUS :

Salary or wages includes dearness allowance but no other allowances e.g.
over-time, house rent, incentive or commission.


SA


1. SEPRATE ESTABLISHMENT :

First profit loss accounts are prepared and mainland in respect of any such
department or undertaking or branch, then such department or undertaking or
branch is treated as a separate establishment.



1. DISQUALIFICATION AND DEDUCTION OF BONUS :

On dismissal of an employee for fraud; or
riotous or violent behavior while on the premises of the establishment; or
theft, misappropriation or sabotage of any property of the establishment;
or Misconduct of causing financial loss to the employer to the extent that
bonus can be deducted for that year.



1. COMPUTATION OF GROSS PROFIT :

Banking company deals as per First Schedule and for others as per Second
Schedule.



1. ELIGIABILTY FOR BONUS :

An employee will be entitled only when he has worked for 30 working days in
that year.



1. PAYMENT OF MINIMUM BONUS :

8.33% of the salary or Rs.100 on completion of 5 years after 1st Accounting
year even if there is no profit.



1. ELIGIABLE EMPLOYEES:

Employees drawing wages up to Rs.10000/- per month or less. For calculationpurposes Rs.3500
per month maximum will be taken even if an employee is
drawing up to Rs.3500 per month.





1. TIME LIMIT FOR PAYMENT OF BONUS :

Within 8 months from the close of accounting year.



1. SET OFF AND SET ON :

As per Schedule IV



1. SUBMISSION OF RETURN :

In Form D to the inspector within 30 days of the expiry of time limit.



1. MAINTANANCE OF REGISTERES AND RECORDS :

A register showing the computation of the allocable surplus referred to
clause (4) of section 2, in Form A. A register showing the set-on and
set-off of the allocable surplus, under section 15, in Form B. A register
showing the details of the amount of bonus due to each of the employees,
the deductions under sections 17 and 18 and the amount actually disbursed,
In Form C.



1. NON APPLICABILITY OF THE ACT:

The employees of these establishments are not covered under this act such
as employees of LIC, General Insurance, Dock Yards, Red Cross, Universities
and Educational Institutions, Chambers of Commerce, Social Welfare
Institutions etc.



1. PENALTY :

For contravention of any provision of the Act or the Rules there is a
penalty of Up to 6 months imprisonment or with fine up to Rs.1000.