Darjeeling's tea gardens brace for hefty hit from bonus payouts

Firms liable to pay up to 20% of annual wages as bonus every accounting year

A political resolution to the current wave of protest for Gorkhaland statehood could be around the corner with the West Bengal government and major Hill parties initiating a dialogue, but it is unlikely to end the woes of the 87-odd tea gardens in Darjeeling. 

The gardens, whose cash flows have been severely hit owing to total crop loss of the second flush, could see labourers press for high annual bonuses as soon as the operations resume. According to industry sources, plantation workers have not been able to earn for over 70 days now because of the Gorkhaland agitation, and this could prompt them to demand hefty bonuses to compensate for their interim loss.

Around 100,000 permanent workers in Darjeeling tea gardens are paid daily wages, which are disbursed on a weekly basis. In case a labourer doesn’t go to work, he or she doesn't get any wages, according to wage rules.

The Payment of Bonus Act, 1965, stipulates that irrespective of the allocable surplus cash by any company, a minimum 8.33 per cent of the annual wages has to be paid as bonus to the workers every accounting year. The maximum permissible bonus is 20 per cent.

S S Bagaria, chairman and managing director of the Bagaria Group and former chairman of the Darjeeling Tea Association (DTA), said a minimum 8.33 per cent bonus would result in an outgo of Rs 20-25 crore. “As the gardens’ cash flow and top line have been severely hit owing to the prime crop loss, I doubt how many gardens will be in a position to even pay the minimum bonus,” he told Business Standard.

It is estimated that the Darjeeling tea industry has already taken a hit of Rs 220 crore, or 45 per cent of the annual earnings, on account of the ongoing shutdown.

A second garden owner suggested that although the bigger companies, with gardens also in Assam or the Dooars region in West Bengal, might be able to route funds to the Darjeeling estate to pay the bonuses, single estate owners or companies entirely dependent on the Darjeeling-Kurseong region would be hit hard.

“Even if we are able to reopen the plantations in late September or mid-October, at least some preparation for the next year’s second flush production can be made. But for this year, nearly the entire crop is lost,” he said, adding that the rain flush or the third flush cannot be harvested, which leaves the gardens at the mercy of the fourth or the autumn flush. Prices of Darjeeling tea from the autumn flush are the lowest.

Nevertheless, legal provisions mandate that the plantations will have to pay the bonus. 

The DTA has already approached the West Bengal government’s labour ministry apprising about the bonus issue, and sought a speedier resolution of the shutdown problem. “We have told the labour minister about the financial health of the companies as well as the industry. But till the gardens reopen, the percentage of bonus to be paid will not be clear,” said Kaushik Basu, secretary general, DTA.

In West Bengal, apart from industry representatives and workers’ trade unions, the state government is also a party to fixing the wages as well as the bonuses. Last year, a 20 per cent bonus over the gross annual wages was paid.

After the Gorkhaland movement spiralled in mid-June, with Gorkha political parties calling for an indefinite shutdown, a majority of tea workers joined the movement, resulting in a closure of gardens. 

Garden owners claimed that no notice of strike was served to the management by trade unions, except the initial two-day strike in early June.

Despite a faction of the agitators calling off the shutdown till September 12, the tea garden owners, fearing political retaliation, are reluctant to reopen the gardens till the Hill’s largest political party, the Gorkha Janmukti Morcha, agrees to it. Its general secretary, Roshan Giri, has indicated that based on a “positive outcome from the talks with the West Bengal government”, the ongoing shutdown may be called off.