Hrm - Bonus Act Copy

HUMAN RESOURCE MANAGEMENT

BONUS By

Supriya lanka

CONCEPT OF BONUS • Bonus Is an extra payment to the workers beyond normal wage. • Bonus is a deferred wage which aims at bridging the gap between actual wage and need-based wage. • Bonus is a share of the workers in the prosperity of an organization. • Bonus is primarily a share in the surplus.

• Bonus payments are common among managerial and executive employees. • But recent trends show that they are increasingly given to employees throught out the organization. • Performance criteria • Quality improvement and • Cost reduction • Motivational tool(performance bonus) • Spot bonus.

BONUS A LEGAL RIGHT • Employees demanded the payment of bonus with a view to bridging the gap between the real wage and need-based wage. • The government appointed the bonus commission in dec,1961,with M.R.Mehar as its chairman,because of the persisting demands made by the employees and their trade unions. • The Bonus commission submitted its report in the year 1964. • Based on recommendations Payment of Bonus act , 1965 came into existence.

PAYMENT OF BONUS ACT 1965 • The government enacted the payment of bonus act in September ,1965. • The important provisions are: 1)60% of the surplus(67% in case of foreign companies) should be allocated for the payment of Bonus. 2)Salary for the purpose of Bonus means Pay+DA. 3)Employees drawing up to Rs.1600 are eligible for Bonus.if the amount of salary is beyond Rs700 and up to Rs1600 it would be taken as Rs700 for the purpose of bonus payment.

4)Employees dismissed for fraud, theft etc. are disqualified for bonus. 5)Minimum bonus payable is 4% of the salary or Rs.40 , whichever is higher. 6)if an employee is below 15years of age, the Bonus payable is 4% of the salary or Rs25, whichever is higher. 7)if the available surplus is not adequate to pay the minimum bonus . It can be set off up to maximum period of 4years.

8)if the available surplus is more than 20% of the bonus,it can be ‘set on’ up to a maximum period of 4years. The employees and trade unions were not satisfied with the 4% of minimum bonus and demanded 8.33% minimum bonus. the government appointed review committee with B.K.Nadan as chairman in April,1972.

AMENDMENT OF THE ACT IN 1972 1)according to amendment payment of bonus is made compulsory , irrespective of profit or loss. 2)The minimum bonus was increased to 8.33% of the salary or Rs80 whichever is higher. 3)The bonus payable to the employees of less than 15 years of age was also increased to 8.33% of the salary or Rs50 whichever is higher. 4)Employees of non-competing public sector undertakings are also eligible to get the statutory bonus.

AMENDMENT OF ACT IN 1975. • According to this amendment , 1)The bonus is to be paid on the basis of profits or productivity of the organization 2)The minimum bonus payable to the employees was reduced to 4% of the salary or Rs.100 , whichever is higher in case of employees below 15years of age. 3)maximum bonus was 20% of the salary.

AMENDMENT OF THE ACT IN 1977 1)The industrial undertaking covered by the act to pay the minimum bonus of 8.33%,irrespective of profit or loss from the year 1976. 2)investment allowance should be taken as prior charge. 3)banking companies and industrial reconstruction of bank of India are covered by the act.

• The act was again amended in 1980. 1)all industrial units has to pay bonus , irrespective of allocable surplus in that financial year. 2)The maximum bonus is 20% of the salary. The act was amended again in 1985. 1)The employees whose salary is up to Rs2500 are eligible for bonus.

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