Govt to hike wage ceiling for bonus to Rs 21,000

The amendment bill will be made effective from April 1, 2015.

The government on Monday introduced a bill in Lok Sabha that seeks to enhance pay eligibility limit of an employee for bonus to Rs 21,000 per month, from Rs 10,000, to make more workers eligible for the benefit.

The Payment of Bonus (Amendment) Bill, 2015 also seeks to enhance the monthly bonus calculation ceiling to Rs 7,000 per month from existing Rs 3,500. It will increase the quantum of bonus substantially.

The amendment bill will be made effective from April 1, 2015. The bill will amend, the Payment of Bonus Act 1965, which is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year.

The bill also provides for a new proviso in Section 12 which empowers the central government to vary the basis of computing bonus.

At present, under Section 12, where the salary or wage of an employee exceeds Rs 3,500 per month, the minimum or maximum bonus payable to employees are calculated as if his salary or wage were Rs 3,500 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 April 1, 2006.

The bill it provides that if (new) calculation ceiling is adopted by the Government of India, the additional approximate expenditure for payment of ad hoc bonus to the employees of the establishments under central government and employees belonging to Railways and Posts (Productivity Linked Bonus) would involve to the extent of Rs 3,128 crore (Rs 31.28 billion).

The proposed amendments in the Act to increase wage ceiling and bonus calculation ceiling were one of assurances given by the Centre after 10 central trade unions went on one-day strike on September 2.

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