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Bonus wage ceiling

Bonus wage ceiling to be increased to Rs. 7000 per month for workers

November 18, 2015

The Cabinet has decided to double the bonus wage ceiling for calculating bonus of Rs 7,000 per month for factory workers and establishments which have 20 or more workers.

“The Payment of Bonus (Amendment) Bill, 2015 to enhance the monthly bonus calculation ceiling of Rs 7,000 per month from existing Rs 3,500 was approved by Union Cabinet here,” a source said after the Cabinet meeting.

The amended bill will be made effective from April 1, 2015. Now the bill will be produced in Parliament for approval.

The bill also seeks to raise the eligibility limit for payment of bonus from the salary of an employee from the existing Rs 10,000 per month to Rs. 21,000.

The Payment of Bonus Act 1965 is applicable to every factory and other establishments which employ 20 or more persons are on any day during an accounting year.

The bill also provides for a new provision in Section 12 which authorizes the central government to vary the basis of computing bonus.

At present, under Section 12, when 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 salary (Or wage)were Rs 3,500 per month.

The last amendment to both the eligibility criteria and the calculation ceilings under the said Act was carried out in 2007 and was made applicable from April 1, 2006.

This amendment in the Bonus Act is to increase wage ceiling and bonus calculation ceiling was one of the assurances which given by the Center after 10 central trade unions went on one-day strike on September 2nd.

The government had hinted at meeting the workers’ aspirations on nine out of 12 demands submitted by the unions.

 

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