Govt doubles monthly bonus calculation ceiling to Rs 7,000

Tribune News Service

New Delhi, October 21

The government today gave its approval for amending the Payment of Bonus Act, 1965, in a bid to make more industrial workers eligible for better bonus payouts, including those with higher salaries.

The decision was taken at the meeting of the Union Cabinet chaired by Prime Minister Narendra Modi, which decided to double the wage ceiling for calculating bonus to Rs 7,000 for factory workers and establishments with 20 or more workers.

The Union Cabinet also gave its approval for signing of an agreement between India and Egypt on Maritime Transport.

“The Payment of Bonus (Amendment) Bill, 2015, to enhance the monthly bonus calculation ceiling to Rs 7,000 from existing Rs 3,500 was approved by Union Cabinet here,” sources said after the Cabinet meeting.

Although the higher level of bonus for the industrial workers is unlikely to come this festive season, but once implemented, it will make all industrial workers drawing a monthly salary up to Rs 21,000 eligible for bonus, as opposed to the current ceiling of Rs 10,000.

The amendment Bill will be effective from April 1, 2015. Now, the Bill will be tabled in Parliament during the forthcoming winter session for approval and eventual implementation, which the government feels may also help assuage the mood of the opposition parties, particularly the Left parties that are opposing the labour reform Bills.

In recent weeks, the government has already cleared distribution of bonus to non-gazetted railway employees and staff of the Employees Provident Fund Organisation (EPFO).

The non-gazetted EPFO staff will get 60 days salary as productivity-linked bonus.

The Payment of Bonus Act, 1965, is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year.

The last amendment to both the eligibility limit and the calculation ceilings under the said Act was carried out in 2007 and was 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 one-day strike on September 2.