Ppt on the Payment of Bonus Act, 1965, Lecture notes of Labour Law

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Payment of

Bonus Act,

INTRODUCTION

• (^) An Act to provide for the payment of bonus to persons employed in certain establishments
• (^) on the basis of profits
• (^) on the basis of production
• (^) on the basis productivity
• on the basis of the matters connected
• (^) 1961: A tripartite commission, THE BONUS COMMISSION was set up by the Central Government to recommend the payment of bonus in a comprehensive manner
• (^) 1965: The Payment of Bonus Act came into existence and was implemented on 29 th^ May 1965 as an ordinance
• 25 TH^ September 1965, as an act

Applicability of the Act

• (^) It applies to any factory or establishment
• (^) which had 20 or more workers employed on any day during the year.

DISQUALIFICATIONS OR

EXCEMPTIONS IN THIS ACT

• (^) It is not applicable to establishments such as LIC, hospitals which are excluded under Section 32.
• (^) It is not applicable to establishments where employees have signed an agreement with the employer.
• (^) It is not applicable to establishments exempted by the appropriate government like sick units.

Accounting Year- SECTION 2(1)

• (^) An accounting year is the period of time over which a company gathers and organizes its financial activity.
• (^) the period with reference to which management accounts and financial statements are prepared.
• (^) In management accounting the accounting period varies widely and is determined by management.
• (^) the year commencing on the 1st day of April

ALLOCABLE SURPLUS- SECTION 2(4)

1.Step 1 – Calculate Gross Profit as per Second Schedule. 2.Step 2 – Calculate Depreciation ( TAXES, SECTION 7, IVESTMENT ALLOWANCES) 3.Step 3 – Calculate Development Rebate or Development Allowance

• (^) sixty-seven per cent of the available surplus in an accounting; year;
• (^) in any other case, sixty percent of such available surplus is bonus

EMPLOYEES- SECTION 2(13)

• (^) means any person other than an apprentice, employed
• (^) on a salary
• (^) to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward
• (^) whether the terms of employment be express or implied

EMPLOYERS- SECTION 2(14)

• (^) the owner or occupier of the factory
• (^) including the agent of such owner or occupier
• (^) the legal representative
• (^) where a person has been named as a manager of the factory

SECTION 3- Establishments to

include departments, undertakings

and branches

• (^) any different departments or undertakings or branches of an establishment of whether located in the same place or at different areas should be considered as parts of the similar establishment for computation of bonus under the Act.
• (^) A separate balance sheet regarding profit and loss of the establishment in the year had to be prepared and maintained concerning such department or undertaking, or branch should be treated as a separate establishment for computation of bonus for the year.

SECTION 8- Eligibility for Bonus

• (^) The employee receiving salary or wages up to Rs.21,000 per month
• (^) The employee engaged in any work whether skilled, unskilled, managerial, supervisory etc.
• (^) The employee who have worked not less than 30 working days in the same year.

SECTION 4-7 + SCHEDULE 1 AND 2

• (^) the calculation of gross profit and available surplus out of which 67% in case of companies and 60% in other cases would be allocable surplus.
• (^) To compute the available surplus the sums, so deductible from the gross profits are:
• (^) All direct taxes under Section 7
• (^) The sums which are particularized in the schedule
• The allowance for investment or development in which the employer is allowed to deduct from his income under the Income Tax Act.
• (^) Available Surplus = Gross Profit – ( deduct) the following :
• (^) Depreciation is allowable in Section 32 of the Income-tax Act.
• (^) Development Allowance.

SECTION 10- PAYMENT OF MINIMUM

BONUS

• The minimum bonus will be 8.33% of the salary during the year, or - (^) 100 rupees will be given in case of employees above 15 years and sixty rupees in the case of employees below 15 years, whichever is higher.

Timelimit for Payment of Bonus

• (^) The payment of bonus should be paid in

cash

• (^) within eight months from the end of the

accounting year or within a month from the

date of enforcement of the act.

SECTION 20- INSPECTORS

• (^) the appropriate government to appoint Inspectors for this Act after notification in the official gazette.
• (^) Powers of inspectors:
• Making an employer to furnish information.
• Able to visit any establishment at any reasonable time.
• (^) Able to order certain production documents and examine the same.
• (^) Able to take extracts from the records
• (^) To examine the employers, his agent or servant or any other person found in charge of the establishment.
• (^) To execute such other powers as may be prescribed under the rules.