Bombay High Court stays retrospective roll-out of new bonus payment act

MUMBAI: In a significant verdict that will bring cheer to India Inc, the Bombay High Court has stayed the retrospective implementation of the recently amended Payment of Bonus Act in an ad interim verdict passed on 13th June, 2016. The verdict was passed based on a writ petition filed by Tech Mahindra and also directed the Union Government not to take any coercive action till a final order is passed in the matter. ET NOW is awaiting an official copy of the detailed, written verdict.

The amended Payment of Bonus Act was notified on 1st January, 2016 and was intended to kick in with retrospective effect from 1st April 2014. The Act provides a statutory right to employees of an establishment to share the profits of his/her employer.

The Act sought to make more employees eligible for bonus by raising the cap on monthly wages from Rs 10,000 to Rs 21,000. According to the Tech Mahindra plea, the retrospective operation of the amended Act imposed a harsh financial burden as the accounts of Tech Mahindra for the financial year 2014-15 had been finalized and closed much prior to the amendments. Additionally, the company argued that bonus had been distributed prior to the amendment.

Law firm Khaitan & Co was the legal advisor to Tech Mahindra. When contacted, litigation partner Raj Panchmatia declined to comment.