Im working in a construction company where nearly 500 (contract labours) employees are working. here there is no bonus paid for them last three years. grade wise their net salary is more than 10000( unskilled, semiskilled, skilled, highskilled, chargehand, supervisor & Sr. Supervisor). according to P.O.B act 1956 an employee who work more than 30 days during the accounting year and less than 10000 salary is entitled to get bonus.
I want to know what are the things to consider for bonus calculation in (i.e Basic, DA, HRA, OT, Project incentives) and whether we have pay them bonus or not?
Thanks & regards
Md. Idreez.
From India, Madras
2I want to know what are the things to consider for bonus calculation in (i.e Basic, DA, HRA, OT, Project incentives) and whether we have pay them bonus or not?
Thanks & regards
Md. Idreez.
From India, Madras
Dear Md. Idreez ji,
The definition of Salary or Wage under POB Act 1965 runs as under:
Section 2(21): "salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include—
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation.--Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee;
I hope the above definition of “salary or wage” will make it clear to you.
Thanks and regards.
Keshav Korgaonkar
From India, Mumbai
The definition of Salary or Wage under POB Act 1965 runs as under:
Section 2(21): "salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include—
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation.--Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee;
I hope the above definition of “salary or wage” will make it clear to you.
Thanks and regards.
Keshav Korgaonkar
From India, Mumbai
Please work out the Bonus qualifying salary on Basic salary and DA only. Other elements may not be considered for deciding eligibility for bonus.
At the same time, if the salary as derived above is less than the Minimum Wages fixed by the government, then the amount of bonus should be calculated on that statutory minimum wages.
Regards,
Madhu.T.K
From India, Kannur
At the same time, if the salary as derived above is less than the Minimum Wages fixed by the government, then the amount of bonus should be calculated on that statutory minimum wages.
Regards,
Madhu.T.K
From India, Kannur
I would disagree Bonus is payable on the full salary as given in the act, not basic and da If the salary as computed above is less than 10,000 then they have to be given bonus.
From India, Mumbai
From India, Mumbai
I Got it Mr. Keshav Korgaonkar sir,
Thanks for the explanation about "Salary & Wage".
But whether we have to pay them bonus? and when it is applicable..
now we are covered and maintaining registers under B.O.C.W act, Inter state migrant act, EPF act, & Contract labours act.
and a part of building is about to start operational.
Can u please suggest me now what are actions to be undertaken.?
Thanks,
Md. Idreez
From India, Madras
Thanks for the explanation about "Salary & Wage".
But whether we have to pay them bonus? and when it is applicable..
now we are covered and maintaining registers under B.O.C.W act, Inter state migrant act, EPF act, & Contract labours act.
and a part of building is about to start operational.
Can u please suggest me now what are actions to be undertaken.?
Thanks,
Md. Idreez
From India, Madras
Dear Friend, Yes, the employees engaged through a Contractor are entitled to receive Bonus. And follow advice given by Mr. Madhu who has correctly advised you on the matter. Best Wishes, Vasant Nair
From India, Mumbai
From India, Mumbai
Dear Md. Idreez,
By the amendment 2007, effective from 01.04.2006 onwards the category of employees employed through contractors on building operation (section 32 (vi)) is deleted from the list of exempted categories. As such employees engaged through contractors on building operation are now under the preview of Bonus Act effective from 01.04.2006.
Vide ordinance No. 8 of 2007, effective from 01.04.2006 onwards the following amendments also came in to force:
i. the amendment to Section 2(13) raising the eligibility limit for payment of bonus, the salary or wage from Rs.3500/- to Rs.10,000 per month; and
ii. the amendment to section 12 raising the ceiling for calculation purpose, the salary or wage from Rs.2500/- to Rs.3500/- per month.
Even though, you are establishment is covered under BOCW, Interstate, PF, CLA etc. the POB Act 1965 is applicable to you.
Thanks with regards.
Keshav Korgaonkar
From India, Mumbai
By the amendment 2007, effective from 01.04.2006 onwards the category of employees employed through contractors on building operation (section 32 (vi)) is deleted from the list of exempted categories. As such employees engaged through contractors on building operation are now under the preview of Bonus Act effective from 01.04.2006.
Vide ordinance No. 8 of 2007, effective from 01.04.2006 onwards the following amendments also came in to force:
i. the amendment to Section 2(13) raising the eligibility limit for payment of bonus, the salary or wage from Rs.3500/- to Rs.10,000 per month; and
ii. the amendment to section 12 raising the ceiling for calculation purpose, the salary or wage from Rs.2500/- to Rs.3500/- per month.
Even though, you are establishment is covered under BOCW, Interstate, PF, CLA etc. the POB Act 1965 is applicable to you.
Thanks with regards.
Keshav Korgaonkar
From India, Mumbai
Mr.Madhu has correctly advised by saying that bonus needs to be computed on Basic + DA as teh definition leaves out all other allowances. If any allowance is to be included or not for compuattion depends up on the fact whether it partakes the character of remuneration or not. Thus it leaves one with basic +DA in the ordinary course of wages.
B.Saikumar
HR & labour Law advisor
mumbai
From India, Mumbai
B.Saikumar
HR & labour Law advisor
mumbai
From India, Mumbai
Dear Idreez,
You have to pay bonus on minimum Rs 3500/ as per act. But how many principle employer paid ? Industries used contract labour like a GULAM till date & I m sure after knowing the fact you can not granted bonus for contractor labour. It is the truth.
By gaining the knowledge on this subject may be you will get good job in future but my question is from you & all the respected experts what are the contribution toward this ?
Sunil Kumar Chauhan
Managing Director
FGLA Concept Marketing Private Ltd.
From India, Calcutta
You have to pay bonus on minimum Rs 3500/ as per act. But how many principle employer paid ? Industries used contract labour like a GULAM till date & I m sure after knowing the fact you can not granted bonus for contractor labour. It is the truth.
By gaining the knowledge on this subject may be you will get good job in future but my question is from you & all the respected experts what are the contribution toward this ?
Sunil Kumar Chauhan
Managing Director
FGLA Concept Marketing Private Ltd.
From India, Calcutta
Dear Saswata,
The definition of bonus as explained by Mr Madhu T. K and Mr. Keshav Korgaonkar is correct. Salary (Basic + DA /VDA) considered for bonus eligibility is up to Rs. 10000.00 per month. Suppose, your basic Salary is Rs. 3000/- and DA /VDA (if applicable to your industry) is Rs. 2000/- per month, then the salary considered for bonus calculation will be as if your salary is Rs. 3500/- i.e. your bonus will be calculated on the basis of Rs. 3500/- per month. To clarify further, if your company has decided to pay 20% of bonus for the year 2011-2012, then your bonus will be Rs. 8400/- (20% of Rs. 3500/- = 700X12 = 8400).
I hope, I am clear.
As rightly said above by the members, contractor workmen are also eligible for Bonus by their respective contractors. Principal Employer needs to ensure that all eligible contract workmen are paid bonus in time.
Rgds,
Rakesh Pd Srivastav
From India, Gurgaon
The definition of bonus as explained by Mr Madhu T. K and Mr. Keshav Korgaonkar is correct. Salary (Basic + DA /VDA) considered for bonus eligibility is up to Rs. 10000.00 per month. Suppose, your basic Salary is Rs. 3000/- and DA /VDA (if applicable to your industry) is Rs. 2000/- per month, then the salary considered for bonus calculation will be as if your salary is Rs. 3500/- i.e. your bonus will be calculated on the basis of Rs. 3500/- per month. To clarify further, if your company has decided to pay 20% of bonus for the year 2011-2012, then your bonus will be Rs. 8400/- (20% of Rs. 3500/- = 700X12 = 8400).
I hope, I am clear.
As rightly said above by the members, contractor workmen are also eligible for Bonus by their respective contractors. Principal Employer needs to ensure that all eligible contract workmen are paid bonus in time.
Rgds,
Rakesh Pd Srivastav
From India, Gurgaon
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