Glimpses of Code of Wages Act-2019-Chapter-IV BONUS-When and How Much you will receive?



Key Features of Code of Wages Act are as follows.

1.       Eligibility to all Establishments having 20 or more persons are employed or were employed on any day during an accounting year. [Chapter- IV, Section41(2)]

2.       Establishments/ Employees excluded from the codes are
a.       LIC of India
b.      Seamen as defined in Merchant Shipping Act
c.       Employees employed by Central or State Government or a Local Authority.
d.      Employees employed by Universities or Educational Institutions.
e.       Employees employed by Indian Red Cross Society.
f.        Employees employed by Hospitals, Chamber of Commerce and social welfare.
g.       Employees employed by Institution established not for purposes of profit.
h.      Employees employed by Reserve Bank of India. [Chapter- IV, Section41(1)]

3.       Employee should be working at least 30 days to be eligible for Bonus. [Chapter- IV, Section26(1)]

4.       Establishment is excluded from the code for 1st Five Accounting years only if the Employer has not able to gain profit. In the year in which Employer derives profit from such establishment, bonus shall be payable. [Chapter- IV, Section26(6)]
      [Note-If an Employer gains profit within 5 Year, the year in which it gained profit. Employer shall pay Bonus to Employees at least at the rate of 8.33%]

5.       Minimum Bonus an employee is eligible for is 8.33% of Basic Salary or Rs. 100 whichever is higher. [Chapter- IV, Section26(1)]

6.       Maximum Bonus an Employee is eligible is 20% of Basic Salary. [Chapter- IV, Section26(3) & 26(5)]

7.       Minimum Bonus is eligible for all Employees, whether an Employer is in Loss. [Chapter- IV, Section26(1)]

8.       Disqualified for bonus, if an employee is dismissed from service for
a.       Fraud
b.      Riotous or Violent Behaviour while on the premises of the establishment.
c.       Theft, misappropriation or sabotage of any property of the establishment.
d.      Conviction of sexual harassment. [Chapter- IV, Section29]

Payment of Bonus out of Allocable surplus is 60% in case of Banking Company and 67% in case of other establishment. [Chapter- IV, Section31(1)

1.     All amounts payable to an employee by way of bonus under this Code shall be paid by crediting it in he bank account of the employee by his employer within a period of eight months from the close of the  accounting year: [Chapter- IV, Section39(1)]

Provided that if, there is a dispute for payment at the higher rate, the employer shall pay eight and one-third per cent. of the wages earned by the employee as per the provisions of this Code within a period of eight months from the close of the accounting year. [Chapter- IV, Section39(2)]
[Note- This is the Reason Bonus is given during Diwali, as the Bonus should be paid within 8 months from 

 close of Accounting Year]

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