Minimum bonus to be hiked to Rs 7,000 a year

Several lakhs of workers in the organised sector will benefit as the Cabinet on Wednesday approved a proposal to raise the salary threshold for mandatory bonus for workers from Rs 10,000 a month at present to Rs 21,000 and the minimum bonus from an annual Rs 3,500 now to Rs 7,000.

All factories and establishments employing 20 or more persons are expected to pay the bonus compulsorily, provided the worker has worked in the establishment for at least 30 days. Employees in Life Insurance Corporation, sailors, dock workers and university employees are outside the Act’s ambit.

The Payment of Bonus (Amendment) Bill, 2015 will be tabled in Parliament for this purpose. The new bonus norms will take effect retrospectively from April 1, 2015.
While the minimum bonus is a legal liability on the firms concerned, whether or not they make a profit, these firms are also required to pay the workers a higher bonus if their “allocable surplus” exceeds the amount payable as minimum bonus, subject to a cap (20%) of the salaries.
The salary ceiling for mandatory bonus eligibility was last fixed in 2007 and made effective retrospectively from April 1, 2006. While industry associations demanded exempting sick units from the requirement of paying bonus, trade unions have pitched for the removal of the ceilings as “profits are not capped”, official sources said.