Type:Preventive Compliance Frequency: Annual

Action to be taken:
Pay eligible employees, bonus as calculated either under the act or a bonus linked to productivity under any agreement or settlement with the employees. Make deductions or adjustments (Sections 17,18) where applicable. The bonus amount has to be paid within 8 months from the close of the accounting year, or in the case of a bonus dispute, within 1 month of the date of the award or settlement. The bonus amount linked with production or productivity under an agreement or settlement cannot be less than the minimum bonus payable under the act.

Audit Requirement:
Has a bonus as calculated under the Bonus Act been paid to all eligible employees within the specified time frame ?

Supporting Documents:
Written Confirmation of Compliance

Related Documents:
Form C - R 4(c): Bonus Paid To Employees In Accounting Year   View doc  41.5 Kb

Related Triggers:
Close Of Accounting Year

Related Keywords:
Bonus

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Related Sections:
Payment of Bonus Act, 1965
12:Calculation of bonus with respect to certain employees:
Where the salary or wage of an employee exceeds seven thousand rupees or the minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is higher, the bonus payable to such employee under Section 10 or, as the case may be, under Section 11, shall be calculated as if his salary or wage were ‘‘seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher. Payment of Bonus Act, 1965
13:Proportionate reduction in bonus in certain cases:
Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than 8.33 percent of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.
Payment of Bonus Act, 1965
14:Computation of number of working days:
For the purposes of Section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which-
(a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment ; and
(d) the employee has been on maternity leave with salary or wage, during the accounting year. Payment of Bonus Act, 1965
17:Adjustment of customary or interim bonus against bonus payable under the Act:
Where in any accounting year-
(a) an employer has paid any Puja bonus or other customary bonus to an employee ; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable, then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance.



Payment of Bonus Act, 1965
18:Deduction of certain amounts from bonus payable under the Act:
Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any. Payment of Bonus Act, 1965
19:Time-limit for payment of bonus:
All amounts payable to an employee by way of bonus under this Act shall be paid in cash by his employer-
(a) where there is a dispute regarding payment of bonus pending before any authority under Section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute ;
(b) in any other case, within a period of eight months from the close of the accounting year :

Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such further period or periods as it thinks fit ; so, however, that the total period so extended shall not in any case exceed two years. Payment of Bonus Act, 1965
31-A:Special provision with respect to payment of bonus linked with production or productivity:
Notwithstanding anything contained in this Act,-
(i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or
(ii) where the employees enter into any agreement or settlement with their employer after such commencement,
for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive bonus due to them under such agreement or settlement, as the case may be:

Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under Section 10 shall be null and void insofar as it purports to deprive them of such right :

Provided further that such employees shall not be entitled to be paid such bonus in excess of twenty percent of the salary or wage earned by them during the relevant accounting year.