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1.    There are 18 employees and three other employees who are working on part-time basis. Is the Payment of Bonus Act applicable?




Yes. To find out whether an establishment employs 20 or more persons under section 1(3)(b) of the Payment of Bonus Act, 1965, a part-time employee will be included. Automobile Karamchari Sangh and others vs. Industrial 'tribunal and others, 1970 (38) FJR 268 (All.HC).


2.    In order to boost the production, some payment is made in the form of incentive. Some of the employees are either resigning, retiring from service or their services are terminated.




As the definition of the expression 'wages' in the Act excludes only bonus, commission, house rent allowance, overtime wages and other allowances and not incentive wages, it will include 'incentive wages'. Merely because the management is paying to its employees bonus and incentive wages separately and the fact that the definition of 'basic wages' in the Employees' Provident Fund Act includes 'incentive wages' in the expression `bonus', it will not justify the taking of a contrary view since the expressions 'wages' and 'basic wages' defined by the two Acts are different and since there is fundamental difference between the two concepts. Therefore, 'incentive wages' are included in the definition of 'wages' as contained in section 2(s) of the Act.


Anglo French Textile Ltd. vs. P.O. Labour Court, 1981 Lab 1C 202: (1981) 58 FJR 252: 1981(1) LLN 522 (Mad. HC).


3.    The institute is a religious institute and it has a temple. Over 20 persons are employed but the establishment has halls which are given for seminars, marriage purpose etc. It is not even registered under the Shops & Establishments Act. The rent earned from hiring out the hall is quite huge and the employees are not being paid any bonus although the salaries are paid regularly.


Are not the employees entitled for bonus?




The institute appears to be an establishment not covered under the Shops & Establishment Act and it is not at all a factory or commercial establishment. The Bonus Act applies to every factory and other establishments in which more than 20 persons are employed. Being a religious institution one cannot call it a commercial establishment. But at the same time the commercial outlook and approach of the institution cannot be ignored If the money earned from letting out of the hall for marriage's and other cultural functions it is required to be examined whether the trust is making profit out of the annual income. The institution may have developed the hall and designed with profit motive although it may or may not make profit. If the temple is not earning profits and whatever income which 'is derived is spent for development of religious and renaissance of religious, cultural activities you cannot treat it as a commercial venture. The fact that it is attached to a ashram or a temple, it cannot be treated as an integral of the religious institutions. It all depends on the merit of each case. If the letting out of the hall is with a commercial outlook certainly the employees employed therein are entitled for bonus.


[1980-AIR (S.C.) - 604 - Workmen of Tirumala Tirupati Devasthanam v. Management & Ors. ]


[2011 - I CLR - 919 - Shri Vatavriksha Swami Maharal Devasthan, Akkalkot v. State of Maharashtra through its Secretary to the Ministry of Industry, Labour & Welfare, Mantralaya & Ors.]


4.    Under what circumstances, the employees of the two separate establishments of one company can claim bonus when separate balance sheets and profit and loss account are maintained?




The principle contained in section 3 of the Payment of Bonus Act, 1965, is that where an establishment consists of different branches, whether situated in the same place or at different places, all such branches shall be treated as part of the same establishment for the purposes of computation of bonus. To that principle is engrafted an exception in the form of a proviso that where in an accounting year, a separate balance-sheet is prepared for an establishment, it shall be treated as a separate establishment and for that purpose, the amount shall, subject to 20% of the total salary or wages of the employees employed during the accounting year, be carried forward for being set on in the succeeding accounting year and so on to be utilized for the purpose of payment of bonus.