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The bonus act of 1965 is introduced in order to reward employees in the organization based on Profit yielded to the organization. The government of India has made it mandate to provide a bonus for the employees of respective Organization
Eligibility and Regulations
Any organization that has more than 10 employees in the case of industries and 20 Employees if it is an establishment is eligible for Bonus Act.
If an employee has completed working 30 financial days in an organization, they are eligible for the Bonus act of 1965.
Based on the revision of law made in the year 2015, The Minimum amount of INR 3500 has now been doubled to INR 7000 per month or the minimum wage for the scheduled employment, as fixed by the appropriate Government whichever is higher. This way employees benefit more. It is also made a mandate that it is not based on employee’s Individual Productivity
For Bonus Payment Salary or wages include basic and Dearness allowances and other allowances such as HRA are not considered.
If an Employee has suspected to be performing fraudulent activities, then a bonus is not applicable to them. This has to be recorded properly with a proper inquiry and also record on acceptance of misconduct should be maintained for dismissal of bonus payment.
When an employee quits his employer, the bonus needs to be paid as part of the settlement process. In the case of an increase in profit, the profit amount also has to be calculated and settled to the employee either through cheque or online transfer.