Labour ministry notifies amendments to Payment of Bonus Act

NEW DELHI: The labour ministry has notified amendments to the Payment of Bonus Act that seek to make more workers eligible for bonus by raising the eligibility limit of employees to those drawing Rs 21,000 per month from Rs 10,000.

Consequently, it has also doubled the limit for monthly bonus calculation to Rs 7,000 per month from Rs 3,500, thus substantially increasing the amount of bonus.

The move is in line with the demands of 10 central trade unions, which had observed a day-long strike on September 22.

The amendments to the Payment of Bonus Act were approved by Parliament in the recently concluded winter session.

The Payment of Bonus Act 1965 is applicable to every factory and other establishment in which 20 or more people are employed on any day during an accounting year.

The revised Act will also provide for a new proviso in Section 12, which empowers the central government to vary the basis of computing the bonus.

As it stands today, Section 12 says that where the salary or wage of an employee exceeds Rs 3,500 per month the minimum or maximum bonus payable to the employee shall be calculated as if his salary or wage were Rs 3,500 per month.

The last amendment to both the eligibility limit and the bonus ceiling under the Act was carried out in 2007 and made effective from April 1, 2006.