Payment of Bonus Act
For employers and management teams, ensuring a productive and committed workforce is always a top priority. A key part of that is ensuring they meet all the statutory obligations—and one such responsibility is paying bonuses to eligible employees under the Payment of Bonus Act.
The Payment of Bonus Act 1965 is not just another formality. It is a mandatory compliance requirement that impacts employee satisfaction, trust, and your factory’s legal standing. Whether you run a large industrial setup or a growing mid-sized operation, understanding the payment of bonus act applicability and requirements is essential to avoid penalties and build goodwill among your workforce.
What Is the Payment of Bonus Act?
The Payment of Bonus Act was enacted in 1965 to provide a statutory right to a share in the profits of the company to the employees. It aims to bridge the gap between the employer and the employee by offering financial recognition of their contribution.
Under the Act, eligible employees are entitled to receive a bonus from their employer based on the profits of the factory or the productivity of the employee, whichever is applicable.
Payment of Bonus Act Applicability
One of the most crucial things to understand as management is the payment of bonus act applicability. Here are the key points:
01
The Act applies to every factory and to other establishments where 20 or more persons are employed.
02
Once applicable, it continues to apply even if the number of employees falls below 20.
03
The employee must have worked for at least 30 days in a financial year to be eligible.
For employers, this means that as soon as your business meets the threshold, compliance is mandatory. Ignorance of applicability is not considered a valid excuse under law.
Common Challenges for Employers
Many employers face challenges in correctly implementing the Act:
Delays, underpayments, or miscalculations can lead to serious consequences, including fines and legal disputes.
How Our Firm Can Help
Navigating through the Payment of Bonus Act can be tricky, especially when multiple departments are involved. This is where our firm steps in. We help employers, HR heads, and management teams understand the finer details of bonus compliance—from eligibility checks to calculation and timely disbursement.
By partnering with us, you gain reliable support in labour law compliance, freeing up your time to focus on strategic priorities.