THE PAYMENT OF BONUS ACT, 1965
ACT NO. 21 OF 1965
[25th September, 1965.]
1*[An Act to provide for the payment of bonus to persons employed in
certain establishments on the basis of profits or on the basis of
production or productivity and for matters connected therewith.]
BE it enacted by Parliament in the Sixteenth Year of the Republic
of India as follows:--
1.
Short title extent and application.
1. Short title extent and application.- (1) This Act may be called
the Payment of Bonus Act, 1965.
(2) It extends to the whole of India 2***.
(3) Save as otherwise provided in this Act, it shall apply to--
(a) every factory; and
(b) every other establishment in which twenty or more
persons are employed on any day during an accounting
year:
3*[Provided that the appropriate Government may, after giving not
less than two months' notice of its intention so to do, by
notification in the Official Gazette, apply the provisions of this Act
with effect from such accounting year as may be specified in the
notification, to any establishment or class of establishments
[including an establishment being a factory within the meaning of sub-
clause (ii) of clause (m) of section 2 of the Factories Act, 1948 (63
of 1948)] employing such number of persons less than twenty as may be
specified in the notification; so, however, that the number of persons
so specified shall in no case be less than ten.]
(4) Save as otherwise provided in this Act, the provisions of
this Act shall, in relation to a factory or other establishment to
which this Act applies, have effect in respect of the accounting year
commencing on any day in the year 1964 and in respect of every
subsequent accounting year:
4*[Provided that in relation to the State of Jammu and kashmir,
the reference to the accounting year commencing on any day in the year
1964 and every subsequent accounting year shall be construed as
reference to the accounting year commencing on any day in the year
1968 and every subsequent accounting year:]
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1. Subs. by Act 23 of 1976, s. 2, for the long title (w.e.f. 25-9-
1975).
2. The words "except the State of Jammu and Kashmir" omitted by Act
51 of 1970, s. 2 and Sch.
3. Ins. by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
4. Added by Act 51 of 1970, s. 2 and Sch. (w.e.f. 1-9-1971).
426
1*[Provided further that when the provisions of this Act have
been made applicable to any establishment or class of establishments
by the issue of a notification under the proviso to sub-section (3),
the reference to the accounting year commencing on any day in the year
1964 and every subsequent accounting year or, as the case may be, the
reference to the accounting year commencing on any day in the year
1968 and every subsequent accounting year, shall, in relation to such
establishment or class of establishments, be construed as a reference
to the accounting year specified in such notification and every
subsequent accounting year.]
(5) An establishment to which this Act applies 2*** shall continue
to be governed by this Act notwithstanding that the number of persons
employed therein falls below twenty 1*[or, as the case may be, the
number specified in the notification issued under the proviso to sub-
section (3)].
2.
Definitions.
2. Definitions.- In this Act, unless the context otherwise
requires,--
(1) "accounting year" means--
(i) in relation to a corporation, the year ending
on the day on which the books and accounts of the
corporation are to be closed and balanced;
(ii) in relation to a company, the period in
respect of which any profit and loss account of the
company laid before it in annual general meeting is
made up, whether that period is a year or not;
(iii) in any other case--
(a) the year commencing on the 1st day
of April; or
(b) if the accounts of an establishment
maintained by the employer thereof are closed
and balanced on any day other than the 31st
day of March, then, at the option of the
employer, the year ending on the day on which
its accounts are so closed and balanced:
Provided that an option once exercised by the
employer under paragraph (b) of this sub-clause
shall not again be exercised except with the
previous permission in writing of the prescribed
authority and upon such conditions as that
authority may think fit;
(2) "agricultural income" shall have the same meaning as in
the Income-tax Act;
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1. Ins. by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
2. The words, brackets, letter and figure "under clause (b) of sub-
section (3)" omitted by s. 3, ibid. (w.e.f. 25-9-1975).
427
(3) "agricultural income-tax" means any law for the time
being in force relating to the levy of tax on
agricultural income;
(4) "allocable surplus" means--
(a) in relation to an employer, being a company
1*[(other than a banking company)] which has not made
the arrangements prescribed under the Income-tax Act
for the declaration and payment within India of the
dividends payable out of its profits in accordance with
the provisions of section 194 of that Act, sixty-seven
per cent. of the available surplus in an accounting
year;
(b) in any other case, sixty per cent. of such
available surplus;
2* * * * *
(5) "appropriate Government" means--
(i) in relation to an establishment in respect of
which the appropriate Government under the Industrial
Disputes Act, 1947 (14 of 1947), is the Central
Government, the Central Government;
(ii) in relation to any other establishment, the
Government of the State in which that other
establishment is situate;
(6) "available surplus" means the available surplus computed
under section 5;
(7) "award" means an interim or a final determination of any
industrial dispute or of any question relating thereto
by any Labour Court, Industrial Tribunal or National
Tribunal constituted under the Industrial Disputes Act,
1947 (14 of 1947), or by any other authority
constituted under any corresponding law relating to
investigation and settlement of industrial disputes in
force in a State and includes an arbitration award made
under section 10A of that Act or under that law;
(8) "banking company" means a banking company as defined in
section 5 of the Banking Companies Act, 1949 (10 of
1949), and includes the State Bank of India, any
subsidiary bank as defined in the State Bank of India
(Subsidiary Banks) Act, 1959 (38 of 1959), 3*[any
corresponding new bank specified in the First Schedule
to the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970). 1*[any
corresponding new bank constituted under section 3 of
the Banking Companies (Acquisition and
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1. Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980).
2. Certain words omitted by Act 23 of 1976, s. 4 (w.e.f. 25-9-1975).
3. Ins. by s. 4, ibid. (w.e.f. 25-9-1975).
428
Transfer of Undertakings) Act, 1980 (66 of 1980 ),] any
co-operative bank as defined in clause (bii) of section
2 of the Reserve Bank of India Act, 1934 (2 of 1934),]
and any other banking institution which may be notified
in this behalf by the Central Government;
(9) "company" means any company as defined in section 3 of
the Companies Act, 1956 (1 of 1956), and includes a
foreign company within the meaning of section 591 of
that Act;
(10) "co-operative society" means a society registered or
deemed to be registered under the Co-operative
Societies Act, 1912 (2 of 1912), or any other law for
the time being in force in any State relating to co-
operative societies;
(11) "corporation" means any body corporate established by
or under any Central, Provincial or State Act but does
not include a company or a co-operative society;
(12) "direct tax" means--
(a) any tax chargeable under--
(i) the Income-tax Act;
(ii) the Super Profits Tax Act, 1963
(14 of 1963);
(iii) the Companies (Profits) Surtax
Act, 1964 (7 of 1964);
(iv) the agricultural income-tax law;
and
(b) any other tax which, having regard to its
nature or incidence, may be declared by the Central
Government, by notification in the Official Gazette, to
be a direct tax for the purposes of this Act;
(13) "employee" means any person (other than an apprentice)
employed on a salary or wage not exceeding 1*[three
thousand and five hundred rupees] per mensem in
any industry 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;
(14) "employer" includes--
(i) in relation to an establishment which is a
factory, the owner or occupier of the factory,
including the agent of such owner or occupier, the
legal representative of a deceased
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1. Subs. by Act 34 of 1995, s. 2 (w.e.f. 1-4-1993).
429
owner or occupier and where a person has been named as
a manager of the factory under clause (f) of sub-
section (I) of section 7 of the Factories Act, 1948
(63 of 1948), the person so named; and
(ii) in relation to any other establishment, the
person who, or the authority which, has the ultimate
control over the affairs of the establishment and where
the said affairs are entrusted to a manager, managing
director or managing agent, such manager, managing
director or managing agent;
(15) "establishment in private sector" means any
establishment other than an establishment in public
sector;
(16) "establishment in public sector" means an establishment
owned, controlled or managed by--
(a) a Government company as defined in section 617
of the Companies Act, 1956 (1 of 1956);
(b) a corporation in which not less than forty per
cent. of its capital is held (whether singly or taken
together) by--
(i) the Government; or
(ii) the Reserve Bank of India; or
(iii) a corporation owned by the Government
or the Reserve Bank of India;
(17) "factory" shall have the same meaning as in clause (m)
of section 2 of the Factories Act, 1948 (63 of 1948);
(18) "gross profits" means the gross profits calculated
under section 4;
(19) "Income-tax Act" means the Income-tax Act, 1961 (43 of
1961);
(20) "prescribed" means prescribed by rules made under this
Act;
(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;
430
(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;
(22) words and expressions used but not defined in this Act
and defined in the Industrial Disputes Act, 1947 (14
of 1947), shall have the meanings respectively assigned
to them in that Act.
3.
Establishments to include departments, undertakings and branches.
3. Establishments to include departments, undertakings and
branches.- Where an establishment consists of different departments or
undertakings or has branches, whether situated in the same place or in
diffcrent places, all such departments or undertakings or branches
shall be treated as parts of the same establishment for the purpose of
computation of bonus under this Act:
Provided that where for any accounting year a separate balance-
sheet and profit and loss account are prepared and maintained in
respect of any such department or undertaking or branch, then, such
department or undertaking or branch shall be treated as a separate
establishment for the purpose of computation of bonus under this Act
for that year, unless such department or undertaking or branch was,
immediately before the commencement of that accounting year treated as
part of the establishment for the purpose of computation of bonus.
4.
Computation of gross profits.
1*[4. Computation of gross profits.- The gross profits derived by
an employer from an establishment in respect of any accounting year
shall--
(a) in the case of a banking company, be calculated in the
manner specified in the First Schedule;
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1. Subs. by Act 66 of 1980, s. 3, for s. 4 (w.e.f. 21-8-1980).
431
(b) in any other case, be calculated in the manner specified
in the Second Schedule.]
5.
Computation of available surplus.
5. Computation of available surplus.- The available surplus in
respect of any accounting year shall be the gross profits for that
year after deducting therefrom the sums referred to in section 6:
1*[Provided that the available surplus in respect of the
accounting year commencing on any day in the year 1968 and in respect
of every subsequent accounting year shall be the aggregate of--
(a) the gross profits for that accounting year after
deducting therefrom the sums referred to in section 6;
and
(b) an amount equal to the difference between--
(i) the direct tax, calculated in accordance with
the provisions of section 7, in respect of an amount
equal to the gross profits of the employer for the
immediately preceding accounting year; and
(ii) the direct tax, calculated in accordance with
the provisions of section 7, in respect of an amount
equal to the gross profits of the employer for such
preceding accounting year after deducting therefrom the
amount of bonus which the employer has paid or is
liable to pay to his employees in accordance with the
provisions of this Act for that year.]
6.
Sums deductible from gross profits.
6. Sums deductible from gross profits.- The following sums shall
be deducted from the gross profits as prior charges, namely:--
(a) any amount by way of depreciation admissible in
accordance with the provisions of sub-section (1) of
section 32 of the Income-tax Act, or in accordance with
the provisions of the agricultural income-tax law, as
the case may be:
Provided that where an employer has been paying bonus to his
employees under a settlement or an award or agreement
made before the 29th May, 1965, and subsisting on that
date after deducting from the gross profits notional
normal depreciation, then, the amount of depreciation
to be deducted under this clause shall, at the option
of such employer (such option to be exercised once and
within one year from that date) continue to be such
notional normal depreciation;
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1. Added by Act 8 of 1969, s. 2.
432
(b) any amount by way of 1*[development rebate or investment
allowance or development allowance] which the employer
is entitled to deduct from his income under the Income-
tax Act;
(c) subject to the provisions of section 7, any direct tax
which the employer is liable to pay for the accounting
year in respect of his income, profits and gains during
that year;
(d) such further sums as are specified in respect of the
employer in the 2*[Third Schedule].
7.
Calculation of direct tax payable by the employer.
7. Calculation of direct tax payable by the employer.- 3*[Any
direct tax payable by the employer] for any accounting year shall,
subject to the following provisions, be calculated at the rates
applicable to the income of the employer for that year, namely:--
(a) in calculating such tax no account shall be taken of--
(i) any loss incurred by the employer in respect
of any previous accounting year and carried forward
under any law for the time being in force relating to
direct taxes;
(ii) any arrears of depreciation which the
employer is entitled to add to the amount of the
allowance for depreciation for any following accounting
year or years under sub-section (2) of section 32 of
the Income-tax Act;
(iii) any exemption conferred on the employer
under section 84 of the Income-tax Act or of any
deduction to which he is entitled under sub-section (1)
of section 101 of that Act, as in force immediately
before the commencement of the Finance Act, 1965 (10
of 1965);
(b) where the employer is a religious or a charitable
institution to which the provisions of section 32 do
not apply and the whole or any part of its income is
exempt from tax under the Income-tax Act, then, with
respect to the income so exempted, such institution
shall be treated as if it were a company in which the
public are substantially interested within the meaning
of that Act;
(c) where the employer is an individual or a Hindu undivided
family, the tax payable by such employer under the
Income-tax Act shall be calculated on the basis that
the income derived by him from the establishment is his
only income;
(d) where the income of any employer includes any profits
and gains derived from the export of any goods or
merchandise out of India and any rebate on such income
is allowed under any law
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1. Subs. by Act 66 of 1980, s. 4, for "development rebate or
development allowance" (w.e.f. 21-8-1980).
2. Subs. by s. 4, ibid., for "Second Schedule" (w.e.f. 21-8-1980).
3. Subs. by Act 8 of 1969, s. 3, for "For the purpose of clause (c)
of section 6, any direct tax payable by the employer".
433
for the time being in force relating to direct taxes,
then, no account shall be taken of such rebate;
(e) no account shall be taken of any rebate 1*[(other than
development rebate or investment allowance or
development allowance)] or credit or relief or
deduction (not here in before mentioned in this
section) in the payment of any direct tax allowed under
any law for the time being in force relating to direct
taxes or under the relevant annual Finance Act, for the
development of any industry.
8.
Eligibility for bonus.
8. Eligibility for bonus.- Every employee shall be entitled to be
paid by his employer in an accounting year, bonus, in accordance with
the provisions of this Act, provided he has worked in the
establishment for not less than thirty working days in that year.
9.
Disqualification for bonus.
9. Disqualification for bonus.- Notwithstanding anything contained
in this Act, an employee shall be disqualified from receiving bonus
under this Act, if he is dismissed from service for--
(a) fraud; or
(b) riotous or violent behaviour while on the premises of
the establishment; or
(c) theft, misappropriation or sabotage of any property of
the establishment.
10.
Payment of minimum bonus.
2*[10. Payment of minimum bonus.- Subject to the other provisions
of this Act, every employer shall be bound to pay to every employee in
respect of the accounting year commencing on any day in the year 1979
and in respect of every subsequent accounting year, a minimum bonus
which shall be 8.33 per cent. of the salary or wage earned by the
employee during the accounting year or one hundred rupees, whichever
is higher, whether or not the employer has any allocable surplus in
the accounting year:
Provided that where an employee has not completed fifteen years
of age at the beginning of the accounting year, the provisions of this
section shall have effect in relation to such employee as if for the
words "one hundred rupees", the words "sixty rupees" were substituted.
11.
Payment of maximum bonus.
11. Payment of maximum bonus.- (1) Where in respect of any
accounting year referred to in section 10, the allocable surplus
exceeds the amount of minimum bonus payable to the employees under
that section, the employer shall, in lieu of such minimum bonus, be
bound to pay to every employee in respect of
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1. Subs. by Act 66 of 1980, s. 5, for "(other than development
rebate or development allowance)" (w.e.f. 21-8-1980).
2. Subs. by s. 6, ibid., for s. 10 (w.e.f. 21-8-1980).
434
that accounting year bonus which shall be an amount in proportion to
the salary or wage earned by the employee during the accounting year
subject to a maximum of twenty per cent. of such salary or wage.
(2) In computing the allocable surplus under this section, the
amount set on or the amount set off under the provisions of section 15
shall be taken into account in accordance with the provisions of that
section.]
4* * * * *
12.
Calculation of bonus with respect to certain employees.
2*[12. Calculation of bonus with respect to certain employees.-
Where the salary or wage of an employee exceeds 3*[two thousand and
five hundred rupees] per mensem, 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 3*[two thousand and five
hundred rupees] per mensem.]
13.
Proportionate reduction in bonus in certain cases.
4*[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 per cent. of his
salary or wage for the days he has worked in that accounting year,
shall be proportionately reduced.]
14.
Computation of number of working days.
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.
15.
Set on and set off of allocable surplus.
5*[15. Set on and set off of allocable surplus.- (1) Where for any
accounting year, the allocable surplus exceeds the amount of maximum
bonus payable to the employees in the establishment under section 11,
then, the excess shall, subject to a limit of twenty per cent. of the
total salary or wage of the employees employed in the establishment in
that accounting year, be carried forward for being set on in the
succeeding accounting year and so on up to and inclusive of the fourth
accounting year to be utilised for the purpose of payment of bonus in
the manner illustrated in the Fourth Schedule.
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1. omitted by act 30 of 1985, s.2.
2. Ins. by act 67 of 1985, (w.e.f. 7-11-1985).
3. Subs. by Act 34 of 1995, s. 3, for "one hundred and six hundred
rupees" (w.e.f. 1-4-1993).
4. Subs. by s. 8, ibid., for s. 13 (w.e.f. 21-8-1980).
5. Subs. by s. 9, ibid., for s. 15 (w.e.f. 21-8-1980).
(2) Where for any accounting year, there is no available surplus
or the allocable surplus in respect of that year falls short of the
amount of minimum bonus payable to the employees in the establishment
under section 10, and there is no amount or sufficient amount carried
forward and set on under sub-section (1) which could be utilised for
the purpose of payment of the minimum bonus, then, such minimum amount
or the deficiency, as the case may be, shall be carried forward for
being set off in the succeeding accounting year and so on up to and
inclusive of the fourth accounting year in the manner illustrated in
the Fourth Schedule.
(3) The principle of set on and set off as illustrated in the
Fourth Schedule shall apply to all other cases not covered by sub-
section (1) or sub-section (2) for the purpose of payment of bonus
under this Act.
(4) Where in any accounting year any amount has been carried
forward and set on or set off under this section, then, in calculating
bonus for the succeeding accounting year, the amount of set on or set
off carried forward from the earliest accounting year shall first be
taken into account.]
16.
Special provisions with respect to certain establishments.
16. Special provisions with respect to certain establishments.-
1*[(1) Where an establishment is newly set up, whether before or after
the commencement of this Act, the employees of such establishment
shall be entitled to be paid bonus under this Act in accordance with
the provisions of sub-sections (1A), (1B) and (1C).
(1A) In the first five accounting years following the accounting
year in which the employer sells the goods produced or manufactured by
him or renders services, as the case may be, from such establishment,
bonus shall be payable only in respect of the accounting year in which
the employer derives profit from such establishment and such bonus
shall be calculated in accordance with the provisions of this Act in
relation to that year, but without applying the provisions of section
15.
(1B) For the sixth and seventh accounting years following the
accounting year in which the employer sells the goods produced or
manufactured by him or renders services, as the case may be, from such
establishment, the provisions of section 15 shall apply subject to the
following modifications, namely:--
(i) for the sixth accounting year--
set on or set off, as
the case may be, shall
be made in the manner
illustrated in the
2*[Fourth Schedule]
taking into account
the excess or defic-
ency, if any, as the
case may be, of the
allocable surplus set
on or set off in res-
pect of the fifth and
sixth accounting
years;
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1. Subs. by Act 23 of 1976, s. 12, for sub-section (1) (w.e.f. 25-9-
1975).
2. Subs. by Act 66 of 1980, s. 10, for "Third Schedule" (w.e.f. 21-
8-1980).
436
(ii) for the seventh accounting year--
set on or set off, as
the case may be, shall
be made in the manner
illustraed in the
1*[Fourth Schedule]
taking into account
the excess or defici-
ency, if any, as the
case may be, of the
allocable surplus set
on or set off in res-
pect of the fifth,
sixth and seventh
accounting years.
(1C) From the eighth accounting year following the accounting
year in which the employer sells the goods produced or manufactured by
him or renders services, as the case may be, from such establishment,
the provisions of section 15 shall apply in relation to such
establishment as they apply in relation to any other establishment.
Explanation I.--For the purpose of sub-section (1), an
establishment shall not be deemed to be newly set up merely by reason
of a change in its location, management, name or ownership.
Explanation II.--For the purpose of sub-section (1A), an employer
shall not be deemed to have derived profit in any accounting year
unless--
(a) he has made provision for that year's depreciation to
which he is entitled under the Income-tax Act or, as
the case may be, under the agricultural income-tax law;
and
(b) the arrears of such depreciation and losses incurred by
him in respect of the establishment for the previous
accounting years have been fully set off against his
profits.
Explanation III.--For the purposes of sub-section (1A), (1B) and
(1C), sale of the goods produced or manufactured during the course of
the trial running of any factory or of the prospecting stage of any
mine or an oil-field shall not be taken into consideration and where
any question arises with regard to such production or manufacture, the
decision of the appropriate Government, made after giving the parties
a reasonable opportunity of representing the case, shall be final and
shall not be called in question by any court or other authority.]
(2) The provisions of 2*[sub-section (1), (1A), (1B) and (1C)]
shall, so far as may be, apply to new departments or undertakings or
branches set up by existing establishments:
Provided that if an employer in relation to an existing
establishment consisting of different departments or undertakings or
branches (whether or not in the same industry) set up at different
periods has, before the 29th May, 1965, been paying bonus to the
employees of all such departments
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1. Subs. by Act 66 of 1980, s. 10, for "Third Schedule" (w.e.f. 21-
8-1980).
2. Subs. by Act 23 of 1976, s. 12, for "sub-section (1)" (w.e.f. 25-
9-1975).
437
or undertakings or branches irrespective of the date on which such
departments or undertakings or branches were set up, on the basis of
the consolidated profits computed in respect of all such departments
or undertakings or branches, then, such employer shall be liable to
pay bonus in accordance with the provisions of this Act to the
employees of all such departments or undertakings or branches (whether
set up before or after that date) on the basis of the consolidated
profits computed as aforesaid.
17.
Adjustment of customary or interim bonus against bonus payable underthe Act.
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.
18.
Deduction of certain amounts from bonus payable under the Act.
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.
19.
Time-limit for payment of bonus.
19. Time-limit for payment of bonus.- 1*[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.
2* * * * *
3* * * * *
---------------------------------------------------------------------
1. Subs. by Act 23 of 1976, s. 13, for "(1) Subject to the
provisions of this section, all amounts" (w.e.f. 25-9-1975).
2. Sub-sections (2) to (7) ins. by Act 68 of 1972, s. 4, omitted by
Act 23 of 1976, s. 13 (w.e.f. 25-9-1975).
3. Sub-section (8) ins. by Act 39 of 1973, s. 4, omitted by Act 55
of 1973, s. 2 (w.e.f. 1-9-1973).
20. Application of Act to establishments in public sector in
certain cases.- 1*[(1)] If in any accounting year an establishment in
public sector sells any goods produced or manufactured by it or
renders any services, in competition with an establishment in private
sector, and the income from such sale or services or both is not less
than twenty per cent. of the gross income of the establishment in
public sector for that year, then, the provisions of this Act shall
apply in relation to such establishment in public sector as they apply
in relation to a like establishment in private sector.
2*[(2) Save as otherwise provided in sub-section (1), nothing in
this Act shall apply to the employees employed by any establishment in
public sector.]
21.
Recovery of bonus due from an employer.
21. Recovery of bonus due from an employer.- Where any money is
due to an employee by way of bonus from his employer under a
settlement or an award or agreement, the employee himself or any other
person authorised by him in writing in this behalf, or in the case of
the death of the employee, his assignee or heirs may, without
prejudice to any other mode of recovery, make an application to the
appropriate Government for the recovery of the money due to him, and
if the appropriate Government or such authority as the appropriate
Government may specify in this behalf is satisfied that any money is
so due, it shall issue a certificate for that amount to the Collector
who shall proceed to recover the same in the same manner as an arrear
of land revenue:
Provided that every such application shall be made within one
year from the date on which the money became due to the employee from
the employer:
Provided further that any such application may be entertained
after the expiry of the said period of one year, if the appropriate
Government is satisfied that the applicant had sufficient cause for
not making the application within the said period.
Explanation.--In this section and in 3*[sections 22, 23, 24 and
25], "employee" includes a person who is entitled to the payment of
bonus under this Act but who is no longer in employment.
22.
Reference of disputes under the Act.
22. Reference of disputes under the Act.- Where any dispute arises
between an employer and his employees with respect to the bonus
payable under this Act or with respect to the application of this Act
to an establishment in public sector, then, such dispute shall be
deemed to be an industrial dispute within the meaning of the
Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding
law relating to investigation and settlement of industrial disputes in
force in a State and
---------------------------------------------------------------------
1. Renumbered as sub-section (1) by Act 66 of 1980, s. 11 (w.e.f.
27-12-1980).
2. Ins. by s. 11, ibid. (w.e.f. 27-12-1980).
3. Subs. by s. 12, ibid., for "sections 22, 23 and 25" (w.e.f. 21-8-
1980).
439
the provisions of that Act or, as the case may be, such law, shall,
save as otherwise expressly provided, apply accordingly.
23.
Presumption about accuracy of balance-sheet and profit and lossaccount
of corporations and companies.
23. Presumption about accuracy of balance-sheet and profit and
loss account of corporations and companies.- (1) Where, during the
course of proceedings before any arbitrator or Tribunal under the
Industrial Disputes Act, 1947 (14 of 1947), or under any
corresponding law relating to investigation and settlement of
industrial disputes in force in a State (hereinafter in this section
1*[and in 2*[sections 24 and 25]] referred to as the "said authority")
to which any dispute of the nature specified in section 22 has been
referred, the balance-sheet and the profit and loss account of an
employer, being a corporation or a company (other than a banking
company), duly audited by the Comptroller and Auditor-General of India
or by auditors duly qualified to act as auditors of companies under
sub-section (1) of section 226 of the Companies Act, 1956 (1 of
1956), are produced before it, then, the said authority may presume
the statements and particulars contained in such balance-sheet and
profit and loss account to be accurate and it shall not be necessary
for the corporation or the company to prove the accuracy of such
statements and particulars by the filing of an affidavit or by any
other mode:
Provided that where the said authority is satisfied that the
statements and particulars contained in the balance-sheet or the
profit and loss account of the corporation or the company are not
accurate, it may take such steps as it thinks necessary to find out
the accuracy of such statements and particulars.
(2) When an application is made to the said authority by any
trade union being a party to the dispute or where there is no trade
union, by the employees being a party to the dispute, requiring any
clarification relating to any item in the balance-sheet or the profit
and loss account, it may, after satisfying itself that such
clarification is necessary, by order, direct the corporation or, as
the case may be, the company, to furnish to the trade union or the
employees such clarification within such time as may be specified in
the direction and the corporation or, as the case may be, the company,
shall comply with such direction.
24.
Audited accounts of banking companies not to be questioned.
3*[24. Audited accounts of banking companies not to be
questioned.- (1) Where any dispute of the nature specified in section
22 between an employer, being a banking company, and its employees has
been referred to the said authority under that section and during the
course of proceedings the accounts of the banking company duly audited
are produced before it, the said authority shall not permit any trade
union or employees to question the correctness of such accounts, but
the trade union or the employees may be permitted to obtain from the
banking company such information as is necessary for verifying the
amount of bonus due under this Act.
---------------------------------------------------------------------
1. Subs. by Act 23 of 1976, s. 16, for "and in sections 24 and 25"
(w.e.f. 25-9-1975).
2. Subs. by Act 66 of 1980, s. 13, for "section 25" (w.e.f. 21-8-
1980).
3. Ins. by s. 14, ibid. (w.e.f. 21-8-1980).
440
(2) Nothing contained in sub-section (1) shall enable the trade
union or the employees to obtain any information which the banking
company is not compelled to furnish under the provisions of section
34A of the Banking Regulation Act, 1949 (10 of 1949),]
25.
Audit of accounts of employers, not being corporations or companies.
25. Audit of accounts of employers, not being corporations or
companies.-(1) Where any dispute of the nature specified in section 22
between an employer, not being a corporation or a company, and his
employees has been referred to the said authority under that section
and the accounts of such employer audited by any auditor duly
qualified to act as auditor of companies under sub-section (1) of
section 226 of the Companies Act, 1956 (1 of 1956), are produced
before the said authority, the provisions of section 23, shall, so far
as may be, apply to the accounts so audited.
(2) When the said authority finds that the accounts of such
employer have not been audited by any such auditor and it is of
opinion that an audit of the accounts of such employer is necessary
for deciding the question referred to it, then, it may, by order,
direct the employer to get his accounts audited within such time as
may be specified in the direction or within such further time as it
may allow by such auditor or auditors as it thinks fit and thereupon
the employer shall comply with such direction.
(3) Where an employer fails to get the accounts audited under
sub-section (2) the said authority may, without prejudice to the
provisions of section 28, get the accounts audited by such auditor or
auditors as it thinks fit.
(4) When the accounts are audited under sub-section (2) or sub-
section (3) the provisions of section 23 shall, so far as may be,
apply to the accounts so audited.
(5) The expenses of, and incidental to, any audit under sub-
section (3) (including the remuneration of the auditor or auditors)
shall be determined by the said authority (which determination shall
be final) and paid by the employer and in default of such payment
shall be recoverable from the employer in the manner provided in
section 21.
26.
Maintenance of registers, records, etc.
26. Maintenance of registers, records, etc.- Every employer shall
prepare and maintain such registers, records and other documents in
such form and in such manner as may be prescribed.
27.
Inspectors.
27. Inspectors.- (1) The appropriate Government may, by
notification in the Official Gazette, appoint such persons as it
thinks fit to be Inspectors for the purposes of this Act and may
define the limits within which they shall exercise jurisdiction.
(2) An Inspector appointed under sub-section (1) may, for the
purpose of ascertaining whether any of the provisions of this Act has
been complied with--
(a) require an employer to furnish such information as he
may consider necessary;
441
(b) at any reasonable time and with such assistance, if any,
as he thinks fit, enter any establishment or any
premises connected therewith and require any one found
in charge thereof to produce before him for examination
any accounts, books, registers and other documents
relating to the employment of persons or the payment of
salary or wage or bonus in the establishment;
(c) examine with respect to any matter relevant to any of
the purposes aforesaid, the employer, his agent or
servant or any other person found in charge of the
establishment or any premises connected therewith or
any person whom the Inspector has reasonable cause to
believe to be or to have been an employee in the
establishment;
(d) make copies of, or take extracts from, any book,
register or other document maintained in relation to
the establishment;
(e) exercise such other powers as may be prescribed.
(3) Every Inspector shall be deemed to be a public servant within
the meaning of the Indian Penal Code (45 of 1860).
(4) Any person required to produce any accounts, book, register
or other document or to give information by an Inspector under sub-
section (1) shall be legally bound to do so.
1*[(5) Nothing contained in this section shall enable an
Inspector to require a banking company to furnish or disclose any
statement or information or to produce, or give inspection of, any of
its books of account or other documents, which a banking company
cannot be compelled to furnish, disclose, produce or give inspection
of, under the provisions of section 34A of the Banking Regulation Act,
1949 (10 of 1949)].
28.
Penalty.
28. Penalty.- If any person--
(a) contravenes any of the provisions of this Act or any
rule made thereunder; or
(b) to whom a direction is given or a requisition is made
under this Act fails to comply with the direction or
requisition,
he shall be punishable with imprisonment for a term which may extend
to six months, or with fine which may extend to one thousand rupees,
or with both.
---------------------------------------------------------------------
1. Ins. by Act 66 of 1980, s. 15 (w.e.f. 21-8-1980).
442
29.
Offences by companies.
29. Offences by companies.- (1) If the person committing an
offence under this Act is a company, every person who, at the time the
offence was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be
liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render
any such person liable to any punishment if he proves that the offence
was committed without his knowledge or that he exercised all due
diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where
an offence under this Act has been committed by a company and it is
proved that the offence has been committed with the consent or
connivance of, or is attributable to any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation.--For the purposes of this section,--
(a) "company" means any body corporate and includes a firm
or other association of individuals; and
(b) "director", in relation to a firm, means a partner in
the firm.
30.
Cognizance of offences.
30. Cognizance of offences.-(1) No court shall take cognizance of
any offence punishable under this Act, save on complaint made by or
under the authority of the appropriate Government 1*[or an officer of
that Government (not below the rank of a Regional Labour Commissioner
in the case of an officer of the Central Government, and not below the
rank of a Labour Commissioner in the case of an officer of the State
Government) specially authorised in this behalf by that Government].
(2) No court inferior to that of a presidency magistrate or a
magistrate of the first class shall try any offence punishable under
this Act.
31.
Protection of action taken under the Act.
31. Protection of action taken under the Act.- No suit,
prosecution or other legal proceeding shall lie against the Government
or any officer of the Government for anything which is in good faith
done or intended to be done in pursuance of this Act or any rule made
thereunder.
31A.
Special provision with respect to payment of bonus linked
withproduction or productivity.
2*[31A. 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
---------------------------------------------------------------------
1. Ins. by Act 66 of 1980, s. 16 (w.e.f. 21-8-1980).
2. Ins. by Act 23 of 1976, s. 19 (w.e.f. 25-9-1975).
443
(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:
1*[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 in so far as it purports to deprive
them of such right:]
2*[Provided further that] such employees shall not be entitled to
be paid such bonus in excess of twenty per cent. of the salary or wage
earned by them during the relevant accounting year.]
32.
Act not to apply to certain classes of employees.
32. Act not to apply to certain classes of employees.- Nothing in
this Act shall apply to--
(i) 3*employees employed by any insurer carrying on general
insurance business and the employees employed by the
Life Insurance Corporation of India;
(ii) semen as defined in clause (42) of section 3 of the
Merchant Shipping Act, 1958 (44 of 1958);
(iii) employees registered or listed under any scheme made
under the Dock Workers (Regulation of Employment) Act,
1948 (9 of 1948), and employed by registered or listed
employers;
(iv) employees employed by an establishment engaged in any
industry carried on by or under the authority of any
department of the Central Government or a State
Government or a local authority;
(v) employees employed by--
(a) the Indian Red Cross Society or any other
institution of a like nature (including its branches);
(b) universities and other educational
institutions;
(c) institutions (including hospitals, chambers of
commerce and social welfare institutions) established
not for purposes of profit;
(vi) employees employed through contractors on building
operations;
4* * * * *
----------------------------------------------------------------------
1. Ins. by Act 66 of 1980, s. 17 (w.e.f. 21-8-1980).
2. Subs. by s. 17, ibid. (w.e.f. 21-8-1980).
3. The words "employees employed by any insurer carrying on general
insurance business and the" shall be omitted by Act 62 of 1968,
s. 41 (date to be notified).
4. Cl. (vii) ins. by Act 23 of 1976, s. 20 and omitted by Act 66 of
1980, s. 18 (w.e.f. 21-8-1980).
444
(viii) employees employed by the Reserve Bank of India;
(ix) employees employed by--
(a) the Industrial Finance Corporation of India;
(b) any Financial Corporation established under
section 3, or any Joint Financial Corporation
established under section 3A, of the State Financial
Corporations Act, 1951 (63 of 1951);
(c) the Deposit Insurance Corporation;
1*[(d) the National Bank for Agriculture and Rural
Development]
(e) the Unit Trust of India;
(f) the Industrial Development Bank of India;
2*[(fa) the Small Industries Development Bank of
India established under section 3 of the Small
Industries Development Bank of India Act, 1989 (39 of
1989);]
3*[(ff) the National Housing Bank;]
2* * * * *
(g) any other financial institution 5*[(other than
a banking company)] being an establishment in public
sector, which the Central Government may, by
notification in the Official Gazette, specify, having
regard to--
(i) its capital structure;
(ii) its objectives and the nature of its
activities;
(iii) the nature and extent of financial
assistance or any concession given to it by the
Government; and
(iv) any other relevant factor;
6* * * * *
(xi) employees employed by inland water transport
establishments operating on routes passing through any
other country.
33.
[Repealed.]
33. [Act to apply to certain pending disputes regarding payment
of bonus.]- Rep. by the Payment of Bonus (Amendment) Act, 1976 (23 of
1976), s. 21 (w.e.f. 25-9-1975).
34.
Effect of laws and agreements inconsistent with the Act.
5*[34. Effect of laws and agreements inconsistent with the Act.-
Subject to the provisions of section 31A, the provisions of this Act
shall have effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or in the terms
of any award, agreement, settlement or contract of service.]
35.
Saving.
35. Saving.- Nothing contained in this Act shall be deemed to
affect the provisions of the Coal Mines Provident Fund and Bonus
Schemes Act, 1948 (46 of 1948), or of any scheme made thereunder.
---------------------------------------------------------------------
1. Subs. by Act 61 of 1981, s. 61 and Second Schedule for sub-cl.
(d) (w.e.f. 12-7-1982).
2. Ins. by Act 39 of 1989, s. 53 and 2nd Sch. (w.e.f. 7-3-90).
3. Ins. by Act 53 of 1987, s. 56 and Sch. II (w.e.f. 9-7-1988).
4. Sub-cl. (ff) ins. by Act 23 of 1976, s. 20 and omitted by Act 66
of 1980, s. 18 (w.e.f. 21-8-1980).
5. Ins. by Act 66 of 1980, s. 18 (w.e.f. 21-8-1980).
6. Cl. (x) omitted by Act 23 of 1976, s. 20 (w.e.f. 25-9-1975).
7. Subs. by s. 22 ibid., for s. 34 (w.e.f. 25-9-1975).
445
36.
Power of exemption.
36. Power of exemption.- If the appropriate Government, having
regard to the financial position and other relevant circumstances of
any establishment or class of establishments, is of opinion that it
will not be in public interest to apply all or any of the provisions
of this Act thereto, it may, by notification in the Official Gazette,
exempt for such period as may be specified therein and subject to such
conditions as it may think fit to impose, such establishment or class
of establishments from all or any of the provisions of this Act.
37.
[Repealed.]
37. [Power to remove difficulties.] Rep. by the Payment of Bonus
(Amendment) Act, 1976 (23 of 1976), s. 23 (w.e.f. 25-9-1975).
38.
Power to make rules.
38. Power to make rules.- (1) The Central Government may make
rules for the purpose of carrying into effect the provisions of this
Act.
(2) In particular, and without prejudice to the generality of the
foregoing power, such rules may provide for--
(a) the authority for granting permission under the proviso
to sub-clause (iii) of clause (1) of section 2;
(b) the preparation of registers, records and other
documents and the form and manner in which such
registers, records and documents may be maintained
under section 26;
(c) the powers which may be exercised by an inspector under
clause (e) of sub-section (2) of section 27;
(d) any other matter which is to be, or may be, prescribed.
(3) Every rule made under this section shall be laid as soon as
may be after it is made, before each House of Parliament while it is
in session for a total period of thirty days, which may be comprised
in one session 1*[or in two more successive sessions], and if before
the expiry of the session 2*[immediately following the session or the
successive sessions aforesaid], both Houses agree in making any
modification in the rule or both Houses agree that the rule should not
be made, the rule shall thereafter have effect only in such modified
form or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the
validity of anything previously done under that rule.
39.
Application of certain laws not barred.
39. Application of certain laws not barred.- Save as otherwise
expressly provided, the provisions of this Act shall be in addition to
and not in derogation of the Industrial Disputes Act, 1947 (14 of
1947), or any corresponding law relating to investigation and
settlement of industrial disputes in force in a State.
40. Repeal and saving.- (1) The Payment of Bonus Ordinance, 1965
(3 of 1965), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action
taken under the said Ordinance shall be deemed to have been done or
taken under this Act as if this Act had commenced on the 29th May,
1965.
---------------------------------------------------------------------
1. Subs. by Act 23 of 1976, s. 24, for "or in two successive
sessions" (w.e.f. 25-9-1975).
2. Subs. by s. 24, ibid., for "in which it is so laid or the session
immediately following" (w.e.f. 25-9-1975).
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