A draft code on labour has proposed to give the Centre the power to notify from time to time the minimum bonus and eligibility limits. The move, according to sources, is aimed at bypassing the cumbersome process of amending the relevant Act each time for revisions. Once the Centre notifies the lower bonus threshold and the upper salary limit for mandatory bonus, the states are expected to follow them, although they are free to prescribe a higher amount as bonus.
The current maximum salary threshold for mandatory bonus for workers stands at Rs 10,000/month and the annual minimum bounty is Rs 3,500. Revisions in both thresholds have been undertaken in the past at irregular intervals.
After remaining static for 19 years since 1965, these were revised in 1985, 1995 and in 2007 (with effect from April 2006).
“Today, if we want to increase these limits, we have to amend the Payment of Bonus Act. In the code, which amalgamates existing labour laws, we are saying any further revisions of these limits won’t require amending the Act. The Centre can notify it from time to time,” an official said.
However, since the revision has become a necessity now as it was last done nearly a decade ago, the labour ministry is also simultaneously pursuing amendment in the Payment of Bonus Act itself for this purpose, with a view to protecting the interest of workers in case the code on wages takes longer time to get passed in Parliament.
Responding to the trade unions’ 12-point charter of demands on the eve of the September 2 nationwide strike call, the labour ministry had assured them to revise the bonus eligibility limit from Rs 10,000 to Rs 21,000 (as monthly salary) and the minimum bonus from an annual Rs 3,500 to Rs 7,000. Industry associations had demanded exempting sick units from the requirement of paying bonus, trade unions have pitched for removal of the ceilings as “profits are not capped”.
The revision of the bonus eligibility and the amounts is being done by factoring in the relevant price increases, the gauge used being the consumer price index-industrial workers or CPI(IW).
Under Section 10 of Payments of Bonus Act, “every employer (as defined in the Act) shall be bound to pay to every employee in respect of every accounting year, a minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year”. All factories and establishments employing 20 or more persons are expected to pay the bonus compulsorily, provided the worker has worked in the establishment for at least 30 days.