The Hindu : Front Page : Salary limit for bonus goes up

Online edition of India's National Newspaper
Tuesday, Oct 02, 2007
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Front Page

Salary limit for bonus goes up

Special Correspondent

Raised from Rs. 3,500 a month so far to Rs. 10,000 a month from now on

NEW DELHI: The Union Cabinet on Monday approved amendments to the Payment of Bonus Act, 1965, that would make industrial workers drawing up to Rs.10,000 monthly salary eligible for annual bonus. Until now, there was a ceiling on entitlement for bonus for those drawing a monthly salary up to Rs.3,500.

The Cabinet meeting, chaired by Prime Minister Manmohan Singh, approved the amendment to Section 2 (13) of the Act “to raise the eligibility limit for payment of bonus from the salary or wage of Rs.3,500 to Rs.10,000 a month,” Union Minister of State for Labour and Employment (Independent charge) Oscar Fernandes told reporters after the meeting.

He said construction workers, even if they had worked for a month with builders or contractors, would also be eligible for a proportional bonus from their employers.

The decision would benefit 7 per cent of the total workforce in the country, which is in the organised sector, said the Minister.

The payout proposal is broadly in line with the recommendations of the 41st session of the Indian Labour Conference held in April this year, and was demanded by the trade unions for long.

Amendment

An amendment to Section 12 of the Act will raise the ceiling for calculation purpose from the salary or wage of Rs.2,500 to Rs.3,500 a month and deletion of Section 32 (vi) would cover the employees recruited through contractors on building operations. The government had indicated to the trade unions that it might bring in an ordinance to implement the ceiling as the next session of Parliament would be only in November and the Centre was keen on giving the benefits in the coming festival season.

Various Union Ministries also follow a productivity-linked bonus, and announce the number of days that would be taken into account for bonus calculation.

The bonus ceiling was fixed at Rs.1,600 in 1965. It was raised to Rs.2,500 in 1985 and to Rs.3,500 in 1995.

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