Employers urge govt to apply amended bonus law from next FY

The largest employers' organisation in the country urged the government on Thursday to consider applying amendments to the Payment of Bonus Act, 1965, from financial year 2016-17 and not retrospectively from April 1, 2015, as passed by the Cabinet earlier.

The All India Organisation of Employers (AIOE), an allied body to the Federation of Indian Chambers of Commerce and Industry (Ficci), argued that applying the amended Act from the start of the current financial year would prove a serious operational challenge to businesses.

The main reason for this is that the enhanced amount has not been provided for in the balancesheet of companies in financial year 2014-15, it said.

The Payment of Bonus Act, 1965, is applicable to all industrial units and other establishments, where 20 or more persons are employed on any given day during an accounting year. The labour ministry had last month proposed an amendment to the Act, whereby all employees earning up to Rs 21,000 a month be eligible for bonus, as against the current cut-off of Rs 10,000 per month. It had also proposed to raise the ceiling for maximum bonus payable, doubling it from the current Rs 3,500 a month to Rs 7,000 a month.

The amended Act also provides for a new provision in the Section 12, which empowers the Centre to vary the basis of computing bonus. Further, it allows another amendment in the Section 38 of the Act to "make the provision for previous publication of the draft rules in sync with other legislations". In a letter to Labour Secretary Shankar Aggarwal, AIOE has pointed out companies have already decided on payable bonus for the current financial year, ending March 31, 2016. Moreover, many industries have already paid bonus to their employees, at existing rate, before the start of the festival session, it said. It added the amendments have serious financial implications for the industry and particularly the MSME sector.

The amendment proposals, set to benefit millions of workers had significantly, been passed by the Union Cabinet on October 21, ahead of the ongoing Bihar elections. The amendment Bill is scheduled to be tabled in the winter session of Parliament, likely to begin next month, in November.

The amendment to the Act to increasing the wage ceiling and maximum amount of bonus payable is one of the assurances given by the Central government after meeting the 10 central trade unions, after they went on a one day strike on September 2. The government had then accepted nine out of the 12 demands of the unions.