 "Festive cheer for workers: Bonus calculation ceiling doubled")
The Union Cabinet on Wednesday added to the festive cheer of the country’s 25 million factory workers by deciding to double the salary limit for being eligible to receive bonuses.
Now, all employees earning up to Rs 21,000 a month will be eligible for bonuses, compared with the earlier cut-off of Rs 10,000 a month. The government has also decided to raise the ceiling for calculation of bonus from Rs 3,500 a month to Rs 7,000 per month.
This implies, if an employee is earning a salary of up to Rs 7,000 per month, he or she is entitled to get a bonus on his or her entire salary or wage. However, if the salary is between Rs 7,000 and Rs 21,000 a month, the payable bonus will be calculated by considering the salary at Rs 7,000 a month.
At present, an employer is mandated to give a minimum bonus of 8.33 per cent of an employee’s salary. So, a worker earning Rs 7,000 a month will receive a minimum bonus equivalent to 8.33 per cent of his salary which comes to Rs 583. A worker drawing Rs 21,000 will also get a minimum bonus equivalent to 8.33 per cent of Rs 7,000 which is Rs 583.
The proposed Payment of Bonus (Amendment) Bill, to be introduced next month in the winter session of Parliament, will be effective from April 1, 2015.
Further, the central government has empowered itself to notify the limits for eligibility of bonus and its calculation through an administrative process, and not by changing the Act. However, the government might do so only “after holding consultations in the prescribed mechanism” and issuing a “notification in the official gazette.”
“A new proviso has been proposed in Section 7 of the Act to empower the central government to vary the basis of calculation under this section, as and when considered necessary, after holding consultations in the prescribed mechanism and by notification in the official gazette,” a senior government official said.
Another amendment has been approved in the Section 38 of the Act to “bring the provision for previous publication of the draft rules in sync with other legislation”.
The last amendment to both the eligibility limit and the calculation ceilings under the said Act was carried out in 2007 and made effective from April 1, 2006.
Trade unions said though the move to increase the bonus eligibility was justifiable, it did not completely address trade unions’ demand.
“Looking at the current price rise levels, the move is justified. However, we are not completely happy. We had demanded a complete removal of ceiling on bonus. When there is no cap on the profits earned by companies, why should there be one on distribution of profits in the form of bonus,” asked D L Sachdev, national secretary, All India Trade Union Congress.
Sachdev also said the workers would benefit only from the third or the fourth quarter of next year, as the amendment will come into effect from April 1, 2015. “The bonus distributed this year will be for 2013-14,” said Sachdev.
