Published On : Wed, Feb 10th, 2016

New amendment in Bonus Act not conducive for growth of industries

VIA on Bonus ActNagpur: In order to understand the various changes and implications in the recent amendment of Payment of Bonus Act, 1965, Vidarbha Industrial Association HRD Forum organized a meet. This meet was attended by employers all over Vidarbha including Sunflag, Indorama, Raymonds, Dinshaw, KEC etc. Based on the request from various organizations, Leading Advocate R B Puranik, who has over 30 years of experience, was invited for guidance and clarification.

Girish Deodhar, Chairman – VIA HRD Forum, introduced Advocate Puranik and requested him to shed light on the recent amendment and the implications. After a brief description of the Bonus Act, Advocate Puraink opened the floor for questions. The edited excerpt are mentioned below –

What are some of the recent amendments in Payment of Bonus Act
Earlier all employees with Wages up to Rs. 10,000 per month fell under the purview of the act, however now all employees with wages up to Rs. 21,000 per month fall under the act. Earlier, the maximum wage for calculation of Bonus was Rs. 3,500, however now the wage has been increased to Rs. 7,000 or minimum wages, whichever is higher. All employees, irrespective of their categories are covered under the act.


What is the biggest concern with respect to the Amendment?
A big concern is the retrospective effect of the Amendment due to which its provisions will be in effect from 1 April 2014. The accounting year is already closed and no provisions were made in the Balance Sheet. Also there is no clarity on how to make payments to employees who have already left and under which accounting heads to show the additional payment.

What are the implications of connecting the Bonus with minimum wages?
I am concerned regarding connecting the Bonus with minimum wages, as it is the first time that two acts have been connected this way.

Minimum wages are different for different industries; hence within same industrial area workmen in different industries will receive different bonuses. Also the industries with units in multiple places may receive different bonus amounts due to being located in different zones, leading to industry unrest. Companies paying 20% of bonus will have higher liability. It could especially be very difficult for Micro, Small and Medium Size Enterprises to bear the increased liability. Due to revision in minimum wages every six months, the bonus liability will also increase every year.

What have been the action taken by the government officials and employers?
Recently in Madhya Pradesh, the Labour Commissioner has communicated to all employers to comply with the recent amendment. Currently both Kerala and Karnataka High Court have passed a stay order on the retrospective effect of the amendment. Many other employer associations in Mumbai and Rajasthan are contemplating filing a writ petition against the amendment.

What are the options being explored?
As per Ashti Sinha, Vice President-VIA due to the appeal from members, VIA will explore the option of filing a Writ Petition in High Court. For further discussions, the next core committee meet is scheduled on Friday, 12 February 2016 at 04:00 pm.

This meeting was attended by Prabhakar Koltewar (Ex-GM – Sunflag), Satish Shrivastava (DGM – Sunflag), Amol Bhople (GM – KEC International Ltd.), Hemendra Sata (Head HR – Dinshaw’s Daurt Foods Pvt. Ltd.), Anand Garge, Vilas Bhoyar (Star Circlips & Engg. Ltd.), R. K. Dheeman (Indoworth Industries Ltd.), Sunil Ghodke(VIP Industries Ltd.), Manish Shitut, Ashish Dubey & Jayant Pimpalgaonkar (Raymond Ltd.), Shrikant Sowale (Facor Steels Ltd.), Yogesh Pathak (Gammon India Ltd.)

Earlier, Pradip B Raut, KEC International Ltd., made a presentation on Bonus Act and also conducted the proceedings of the programme. Ashti Sinha, Vice President-VIA proposed a vote of thanks.