Ringing in some cheer in the festive season for the workforce, the Narendra Modi government is set to make more employees eligible for annual bonuses by amending the Payments of Bonus Act of 1965.
According to the proposal, those earning upto Rs 18,000 a month will now be eligible for a bonus of upto Rs 6,000 a month. This would be a sharp jump from the current wage ceiling of Rs 10,000 per month and a minimum bonus of Rs 3,500 per month or Rs 72,000 annually that is permitted at present.
The issue was taken up at a tripartite consultation called by labour minister Narendra Singh Tomar with trade unions and employers on Monday to discuss amendments to the Payments of Bonus Act.
?In view of changing scenario and price rise, the minister asked the participants to deliberate upon the ministry?s proposal to amend the Payment of Bonus Act by enhancing the eligibility ceiling under section 2(13) of the Act from Rs 10,000 per month to Rs 18,000 month and calculation ceiling under section 12 from Rs 3,500 per month to Rs 6,000 per month,? said an official release. Sources said that industry representatives expressed reservations about the revised ceilings but the government is still keen to go ahead with it.
The wage ceiling and the entitlement ceiling were last revised in 2007 and made effective retrospectively from 2006. The move, which comes on the back of demands from trade unions for abolition on ceilings on payment of bonus due to rising inflation, was also recommended by the National Commission on Labour. Internal calculations by the ministry reveal that the Consumer Price Index (industrial workers) rose to 243 points from 134 points between November 2007 and November 2013. ?The equivalent amount of Rs 3,500 works out to Rs 6,347 and that of Rs 10,000 (eligibility limit) to Rs 18,134. Hence, there is a case in point to revise the calculation ceiling to Rs 6,000 and also the eligibility limit to Rs 18,000 in terms of rise in price index,? said a note prepared by the labour ministry.
Under the Act, factories and establishments employing 20 or more persons are expected to pay bonus to their employees in every accounting year, provided the worker has worked in the establishment for at least 30 days. However, employees in Life Insurance Corporation, seamen, dock workers, university employees are excluded from the provisions of the Act.