Bonus Ceiling Limit 21000 Notification

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Bonus Ceiling Limit 21000 Notification

The Lok Sabha has passed modifications to the Payment of Bonus Act that aim to make more workers eligible for bonuses by boosting the monthly wage eligibility limit for employees from Rs 10,000 to Rs 21,000, as opposed to Rs 10,000.

The measure, which was introduced in the House earlier this month, also seeks to raise the monthly bonus calculation ceiling from Rs 3,500 to Rs 7,000, thereby significantly increasing the amount of incentive. Both proposed reforms are in line with the demands of ten central trade unions, who went on strike on September 22. “We thank the government for fulfilling one of its commitments under our 10-point charter of demands, and we hope that it will continue to work to fulfill its other commitments as well.”

Bonus Ceiling Limit 21000 Notification

The bill will now be tabled in Rajya Sabha. Once approved, it will be made effective from April 1, 2014. The Payment of Bonus Act 1965 is applicable to every factory and other establishment in which 20 or more people 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 the bonus.

As it stands today, Section 12 says that where the salary or wage of an employee exceeds Rs 3,500 per month, the minimum or maximum bonus payable to the employee shall be calculated as if his salary or wage was Rs 3,500 per month.

The last amendment to both the eligibility limit and the calculation ceilings under the Act was carried out in 2007 and made effective from April 1, 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 a day-long strike on September 2.

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