Indian Laws on Bonus: Know How It Works For You
The term ‘bonus’ has a magical effect on professionals, doesn’t it? If you are a professional, it is a word that you expect to see and benefit from. This is defined as a boon or gift over and above what is nominally due as remuneration to the receiver. In the industrial context, a bonus can be defined as an incentive or extra monetary benefit given to workers other than their salary or wages.
A bonus is often performance oriented and given based on the efforts and performance of an employee. Suppose a sales executive meets his targets or if a production manager reaches the production goals of a company, the company may have a policy to recognize this performance by giving a bonus. These people may be entitled to bonus for there excellent performance and extra efforts.
Indian Laws on Bonus: Types of Bonus
Indian laws on bonus divide it into two main types, as given below:
This type of bonus has attained legal recognition under the Payment of Bonus Act, 1965. This type of bonus depends on amount of profit earned by the company in the accounting year.
The payment of this type of bonus depends on the production of the company in the relevant year. It is mainly given in addition to wages and awarded for the extra efforts of the workers for more production. Apart from the above mentioned type of bonus, few other types of bonus are, bonus implied by a contract, festival bonus, goodwill bonus and so on.
Indian Laws on Bonus: Who All Are Eligible to Get Bonus?
The Section 8, of the Industrial Dispute Act, provides every employee who has worked in the establishment for at least 30 workings days of an accounting year shall be entitled to get bonus for the year.
As per Section 9, of the Act, some people are not entitled to get bonus, such as an employee who has been terminated on the grounds of committing fraud, riotous or violent behavior while in the premises of the establishment or committing theft or causing damage of any property of the establishment.