PRESENTAION ON

THE PAYMENT OF BONUS ACT,1965

BY- HARERAM YADAV

CONTENTS
 INTRODUCTION
 SCOPE AND APPLICATION
 WAGE OR SALARY
 ELIGILITY FOR BONUS
 PAYMENT OF MINIMUM AND MAXIMUM BONUS
 TIME LIMIT FOR PAYMENT OF BONUS
 DEDUCTION FROM BONUS
 PENALTY FOR OFFENCES
 CONCLUSION.
 INTRODUCTION

 The ‘Bonus’ implies something paid as a gesture of good will.

 Bonus as “an award in cash or its equivalent by an employer to
an employee, for accomplishment other than paid for by regular
wages.”
 The Bonus Act enacted 1965.
 The act was amended in -
1968,1969,1975,1976,1977,1978,1980,1985,and 1995.
 SCOPE AND APPLICATION

 The act extends to whole of India. Sub-section(3) of the section

1 provides that the act shall be applicable to those
establishments employing 20 or more workers employed on
any day of accounting year. The reduction of strength in the
number of employee would not make it inapplicable to an
establishment. The act does not apply to public enterprises
except those operating in competition with similar other
private undertaking . It is also not applicable to non profit
making institutions like R.B.I., L.I.C. of India and managed
undertakings. However, all Banks are covered under the Act.
 Non –application of the Act to certain Classes of
Employers

Nothing in the Payment of Bonus Act applies to-

1. Employees employed by any insurer carrying on general insurance

business and the employees employed by the L.I.C of India.

2. Employees employed through contractors or building operations.

3. Employed by the Reserve Bank of India.

4. Employees employed by –

 The industrial Finance Corporation of India.

 The Unit Trust of India. 

 The Industrial Development Bank of India.

 The National Bank of Agriculture and Rural Development.

 The National Housing Bank.

 WAGE OR SALARY
 Wage or Salary means all remuneration ( other than
remuneration of overtime work)
 capable of being
expressed in monetary terms if the terms of
employment is express or implied. It does not include-

a) Any other allowance for which an employee is entitled

to for the time being.
b) Any commission payable to the employee.
c) Any traveling concession.
d) The value of house accommodations, H.R.A. or of
supply of light, water, medical allowance, other
amenity.
e) Any Bonus; (including incentives, production, and
attendance bonus.)
 ELIGIBILITY FOR BONUS
Every employee shall be entitled to receive bonus in a given
accounting year with the provisions of the Act, provided he
has not worked in the establishment for not less than thirty
Days in that year .
An employee shall not be entitled to any bonus if his services
are terminated on account of-
a) Fraud;
b) Riotous or violent behavior within the establishment; or
c) Theft, misappropriation or sabotage of any property of the
establishment.
 PAYMENT OF MINIMUM AND MAXIMUM BONUS
 The act requires that where an employer has any
allocable surplus in any accounting year then he shall
be bound to pay to every employee in respect of that
accounting year, a minimum bonus shall be not less
than 8.33% of the wage and salary earned by the
employee. However, in case where the allocable
surplus during the accounting year shall be subjected
to maximum of 20% of such salary or wage earned by
the employee during the year.
 TIME LIMIT FOR PAYMENT OF BONUS
 The amount of bonus is required to be paid to an employee
within a period of eight months from the close of accounting
year. In case of any dispute regarding payment of bonus is
pending before any authority it is required to be paid within a
period of one month from which the award becomes
enforceable.
 DEDUCTION FROM BONUS

 Where in any accounting year an employee is found

guilty of misconduct, the employer is authorized to
deduct the amount of loss from the bonus payable to
the guilty employee in that accounting year. Also
where an employee has not worked for all the days
in accounting year, the amount of bonus payable to
him under (Section 10) shall be proportionally
reduced.
 PENALTY FOR OFFENCES
 If any person contravenes any of the provisions of this act or to
whom a direction is given is made to fails to comply with the
direction he is punishable with imprisonment for a term which
may extended to six months or with fine which may extend to
one thousand rupees or both.
 CONCLUSION
The Payment of Bonus Act has been formulated in 1965 for the
The Payment of Bonus Act has been formulated in 1965 for the
welfare of the workers or the employees so that they can also
avail the benefits out of the profits earned by the employers,
but they are abide by certain rules and regulations so that if any
person contravenes any of the provisions of the act or fails to
comply with the direction he is punishable with imprisonment
or both.
 THANK
YOU