Govt doubles salary limit for bonus calculation to Rs7,000 per month

21 October 2015

The union cabinet has decided to double the wage ceiling for calculating bonus to Rs7,000 per month for factory workers and for those employed in establishments with 20 or more workers.

''The Payment of Bonus (Amendment) Bill, 2015 to enhance the monthly bonus calculation ceiling to Rs7,000 per month from the existing Rs3,500 was approved by the union cabinet here,'' a source said after the cabinet meeting.

The bill also seeks to enhance the eligibility limit for payment of bonus from the salary or wage of an employee from Rs10,000 per month to Rs21,000.

The bill will now be tabled in Parliament for approval. The amendment bill will be made effective from 1 April 2015.

The Payment of Bonus Act 1965 is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year.

At present, under section 12 of the Act, where the salary or wage of an employee exceeds Rs3,500 per month, the minimum or maximum bonus payable to employees are calculated as if his salary or wage were Rs3,500 per month.

The last amendment to both the eligibility limit and the calculation ceilings under the said Act was carried out in 2007 and was made effective from 1 April 2006.

This amendment in the Act to increase wage ceiling and bonus calculation ceiling was one of assurances given by the centre after 10 central trade unions went on one-day strike on 2 September.

The government had hinted at meeting workers' aspirations on nine out of 12 demands submitted by the unions.

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