1

GRATUITY ACT
The term gratuity is not defined under the act. It is a lump sum payment made by the employer to his employee in consideration the services rendered by the Employee. This payment is to be made at the time when the employer employee relationship come to an end. Before the passing of this act there was no legislation of this subject. Hence, the benefits of this act are available to the employees after 1 !". SCOPE AND APPLICATION The act e#tends to the whole of India. It is applicable to $ 1. Every factory, mine, oilfield, part and railway company.% ". Every shop or establishment & covered under shop act of respective state ' in which ten or more persons are employed. (. )uch other establishment having ten or more employee has central government may specified. *nce the act is applicable it will continue to apply even if the number of employee falls below ten. IMPORTANT DEFINATIONS EMPLOYEE +eans any person other than an apprentice employed on wages in any establishment to do s,illed, semis,illed or uns,illed, manual, supervisory or technical or clerical wor, whether or not such person is employed in a managerial or administrative capacity but does not include a person holding a civil post under the central or state government and is governed by any other act providing for gratuity. FAMILY : It consists of $ 1' In case of a male employee himself, his wife, his children &married or unmarried', his dependant parent or dependant parent of his wife and the widow and children of his predeceased son. "' In case of female employee-herself, her husband her children &married or unmarried', her dependant parents and dependant parent of her husband and widow and children of her predeceased son &if any'. (' If a child is adopted by employee, it shall be included in family and if child of an employee is adopted by another, it shall be e#cluded.

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CONTINUOUS SERVICE : 1. The significance of continuous service is that the more the number of years of continuous service, the more will be the gratuity. ". .n employee is said to be in /) for a period, if for that period there in no interruption in service. 0hen an employee does not wor, for a day there is interruption. However certain interruptions are not considered as interruption. Thus if an employee remains absent on an account of sic,ness, accident, leave, lay-off, stri,e, loc,-out or cessation of wor, not due to fault of employee are not treated as interruptions. )imilarly absence without leave is also not an interruption unless the employer has passed an order treating such absence without leave as a brea, in service. (. Even if the service is interrupted, the interruptions are ignored if the employee has actually wor,ed for 1 1 days &under the ground in case of mine' and "21 days in other cases, &for /) of 1 year'. 2. 3or calculating /) for 4 months. /ontinuous )ervice point continued it has to be same, whether the employee has actually wor,ed for 5 days in case of mine or 1"1 day in other cases. 2. 3or calculating actual wor,ing of an employee the following days shall be treated as if the employee has actually wor,ed. a' b' c' d' 6eave with pay. .bsence due to employment injury +aternity leave of 1" wee,s. The days of lay-off.

5. In case of seasonal establishment if an employee is not in continuous service, he shall be deemed to be in continuous service for that period &1 year or 4 months' if he has actually wor,ed for !57 of the total wor,ing days of that establishment. DETERMINATION OF AMOUNT OF GRATUITY: 1. The person who is illegible to receive gratuity has to sent a written application to the employer in a prescribed manner. ". 0hether such application made or not, the employer has to sent a written notice to such person and copy of such notice is to be sent to the controlling authority under the act. (. The employer has to pay the gratuity within (1 days from the date it becomes payable. 2. The employer who fails to pay gratuity within (1 days is liable to pay interest at specified by the controlling authority. 5. If there is any dispute about the amount of gratuity, the employer has to deposit with the controlling authority, that amount of gratuity which he admits to be payable.

( 4. By deciding the dispute the controlling authority shall give reasonable authority to both the parties, of being heard &opportunities'. In such en8uiry the controlling authority has all the powers as a civil court. !. .ny person argued &not satisfied' with the order of controlling authority may file and appeal with the appellate authority within 41 days. RECOVERY OF GRATUITY 1. If the gratuity payable is not paid by the employer within the prescribed time the person ma,ing the claim is entitled to ma,e an application to the controlling authority. ". The controlling authority shall ma,e en8uires and if satisfied that gratuity has not been paid, he shall issue a certificate for that amount to the collector. (. The collector shall recover the amount from the employer if it is arrear of land revenue. 2. The interest on gratuity shall not be more than the gratuity. COMPULSORY INSURANCE In order to ensure that the payment of gratuity is assured to all employees in all situations, it is binding on every employer to ta,e insurance and his liability to pay gratuity. )uch insurance has to be with the 6I/ of India or any other insurer notified by the central government. However the employers who have already established an approved gratuity fund are e#empted from such compulsory insurance. AUTHORITIES UNDER ACT 1. /ontrolling .uthority 9 It is a judicial authority and it is appointed by the government for different local areas. It consists of one person only who is the judge. It has all the powers vested in a civil court under the code of the civil procedures. It has to decide the disputes between the employer and the applicant relating to payment of gratuity. It can re8uire the parties to appear before it and also produce the relevant documents. It can administer oath to the parties and record evidence on affidavits. 2. INSPECTORS9 The appropriate government appoints inspector in such numbers as it considers necessary. He is a public servant under Indian :inal /ode. His powers are a' To enter the premises of an establishment for inspection of documents. b' To re8uire the employer to answer his 8uestions. c' To ta,e copies of the registers and if necessary to sei;e the records and registers if he believes that the employers has committed any offence under the act.

PROTECTION OF GRATUITY <o gratuity payable under this act can be attached in e#ecution of any decree &judgment' or order of any civil, criminal or revenue court. 3or e.g. if an employee ta,es a loan from ban, for buying a vehicle or land ma,es a default in re-payment of loan, the ban, may obtain an order from court for attaching the property, ban, account of such employee to satisfy its loan dues, however the gratuity payable to such employee cannot be attached by the ban,. PAYMENT OF GRATUITY =ratuity is payable to an employee from his employer when employment comes to an end on grounds of e' f' g' h' )uperannuation >etirement >esignation ?eath ?isablement due to accident or disease

However, the employee must have rendered /) for at least five years. In case, the employment come to an end on account of death or disablement, the condition of 5 years say ( years, dies or is disabled, his nominee or he would be entitled to gratuity for ( years. /alculation of gratuity is done @ 15 days wages for every completed year of service. .ny part of service over 4 months is ta,en as every completed year of service. .ny part of service over 4 months is ta,en as 1year. The wages of an employee are the last drawn rate of wages. In the case of piece rated employee &one who is paid wages as per 8uantity produced' his one day wages is computed on basis of his average earning during period of preceding ( months. The amount of gratuity for an employee in seasonal establishment is ! days wages for each season. In case of monthly rated employee his one day is computed by dividing the last rate of salary by "4 days. The one day wage so arrived at shall be multiplied by 15 which would be his gratuity for 1 year, the amount is then multiplied by number of years of continous service 5111 $$$$ # 15 # 11 &yrs' "4

.n employee may be continued in employment even after his disablement on reduced wages in such a case his wages before death of disablement are ta,en to be the wages drawn by him before such date and for subse8uent period his wages would mean the reduced wages. If there is an agreement between employer and employees which provides for better terms of =ratuity. The employees would be entitled to receive under the agreement. If an employee is dismissed from employment for an act of misconduct, he would yet be entitled to gratuity, however in grounds for dismissal are those which are mentioned in section 2. The employee shall not be entitled to gratuity. This is called A3orfeitureB of gratuity. )ubsection 4 states that if an employee is dismissed for willful omission or negligence, causing any damage or loss to employerCs property, his gratuity shall be forfeiture to e#tent of damaged cost. If an employee is dismissed for an offence involving moral turpitude &corruption' or for riotous or disorderly conduct or for an act of violence, his gratuity may be wholly or partially forfeiture. Hence if an employee is dismissed for absenteeism or disobedience he would even then be entitled to gratuity. NOMINATION Every employee who has completed 1 year of service shall ma,e a nomination in favor of a person or persons to receive the gratuity in the event of his death. The rules of nomination are as follows 91. .fter completing service 1 year and an employee shall ma,e a nomination preferably within 1( days. ". In his nomination, the employee can distribute amount of gratuity among more than one nominee. &517 to father, 517 to mother'

4 (. <omination has to be in favor of member of his family. .ny nomination made in favor of a person who is not family member is invalid. 2. If at the time of ma,ing the nomination, the employee has no family, the nomination can be in favour of any person. However, if he subse8uently ac8uires a family such nomination becomes invalid and employee has to ma,e a fresh nomination. 5. .n employee can change his nomination at any time by giving written notice to employer. The employer has to ,eep all the nominations changes etc in safe custody.

MINIMUM WAGES ACT 1948

This act was passed with object of preventing the e#ploitation of wor,ers since they were paid very law wages. The act describes the minimum wages for certain employments. The .ct contemplates that minimum wages rate must ensure not only the mere physical need of the wor,er which would ,eep him just above starvation but must ensure for him not only his subsistence and that of his family but also preserve his efficiency as a wor,men. It should, therefore, provide not merely for the bare subsistence of his life but the preservation of the wor,ers and so must provide form some measure of educational, medical re8uirements and amenities. )alient feature of the .ct9 - )ome of the feature are91' This .ct provides for the fi#ation of9 &a'+inimum time rate of wagesD&b'a minimum piece rateD&c'a guaranteed time rateD and &d' an overtime rate, for different occupations, localities or classes of wor, and for adults, adolescents, children and pprentices. "' The minimum rate of wages under the .ct may consist of9 &a' a basic rate of wages and a cost of living allowanceD or &b' basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of essential commodities supplied at concessional rates9 or &c' an all-inclusive rate. (' The .ct re8uires that wages shall be paid in cash, although it empowers the appropriate =overnment to authori;e the payment of minimum wages, either wholly or partly in ,ind in particular cases. 2' It lays down that the cost of living allowance and the cash value of living allowance and the cash value of concessions in respect of supplies of essential commodities at concessional rates shall be computed by the competent authority at certain interval. In case of underta,ings controlled by the Enion Territories and the /entral =overnment, the ?irector, 6abour Bureau is the competent authority. 5' The .ct empowers the appropriate =overnment to fi# the number of hours of wor, per day, to provide for a wee,ly holiday and the payment of overtime wages in regard to any )cheduled employment in respect of which minimum rates of wages have been fi#ed under the .ct. 4' The establishment covered by this .ct are re8uired to maintain registers and records in the prescribed mannerD !' The .ct also provided for appointment of Inspectors and authorities to hear and decide claims arising out of payment of wages at less than the minimum rates of wages or remuneration for days of rest or of wor, done on such days or of overtime wages. F' The provision is also made in the .ct for dealing with complaints made for violation of the provisions of the .ct and for imposing penalties for offences committed under the .ct.

SCOPE & APPLICATION The act e#tends to the whole of India and it is applicable to the employments which are included in a schedule of the .ct WAGES +eans all remunerations that can be e#pressed in term of money which could be payable Dto an employed person if the terms of employment are fulfilled. The employment contract may e#press or inclined an includes house rent allowances but does not include 1' "' (' 2' 5' 4' The value of house accommodation )upply of lighting, water, medicines, EmployerCs contribution to :rovident 3und Traveling allowance =ratuity )pecial e#penses paid to employed person

FIXING OF MINIMUM RATE OF WAGES 1. The appropriate =overnment shall fi# the minimum rate of wages in the respect of scheduled employee. ". The )tate =overnment may fi# the minimum rate wages for certain classes of employment either for whole state or in part. (. The +>0 shall review atleast once in 5 years the +>0 G revised then if necessary. 2. The +>0 may be fi#ed for time wor, called A+inimum time wor,B or for Hpiece wor,C or minimum piece rate or on the basis of time spend on piece wor, called guranted time rate. 5. 0hile fi#ing or revising the +>0 different rates may be fi#ed for $ a' ?fferent scheduled employment b' ?ifferent localities c' ?ifferent classes of wor, in the same employment. d' .dult, adolson, children, apprentices. 4. The +>0 may be fi# by any of the following wage period 9i' by the hours ii' by the day iii' by the month

PROCEDURE FOR FIMDING AND RIVISING MINIMUM WAGES :

The appropriate government may follow any of the following two methods COMMITTEE METHOD : Ender this the appropriate govt. appoints as many committees and subcommittees to hold en8uiries and advise the govt. on +>0. .fter considering the advise the govt. fi#es or revises the +>0 G they shall come into force after a period of ( months. NOTIFICATION MFETHOD: Ender this the =ovt. published its proposals on +>0 for the information of concerned persons and invites there representationsD It specified a date after two month on which the representations would be consider. .fter considering on that date the =ovt. fi#es or revises the +>0. 0hile doing so it has to consults the .?II)*>J B*.>? also. ADVISORY BOARD: 1. The appropriate =ovt. appoints an advisory board for the purpose of coordination the wor, of committees and sub-committees and advising the govt. on +>0. ". It shall consists of person nominated by the govt. to represent employers and employees in scheduled employment. They shall be e8ual in number. There shall also be independent person who will not be more than 1%(rd of the total number one such independent person shall be the chair-man.

CENTRAL ADVISORY BOARD 1. 3or the purpose of advising and for co-ordinating wor, of advisory board the central govt. appoints a H/E<T>.6 .?II)*>J B*.>?C. ". The constitution shall be the same as in the case of .?II)*>J B*.>?. It shall consists of person nominated by the govt. NORMAL WOR ING DAY 1. .pproprate govt. may fi# number of hours which shall constitute a normal wor,ing day and a normal wor,ing wee,. ". It may also provide for a day of rest in a period of ! days for which normal wages shall be paid. (. It may also fi# the overtime rate for wor, on a day of rest.

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WOR ING FOR LESS THAN NORMAL WOR ING DAY Even if an employee wor,s on any day on which he was employed for a period less than the re8uisite number of hours constituting a normal wor,ing day . He shall be entitled to receive wages in respect of wor, done by him on that day as if he had wor,ed for a full normal wor,ing day. However this rule is not applicable if the failure to wor, is due to unwillingness of the employee and not due to omission of the employer. WAGES IN IND

1. +inimum wages shall be paid in cash. ". However if there is a custom a paying wages in ,ind the govt. may authori;ed payment of minimum wages either wholly or partly in ,ind. (. The cash value of wages in ,ind shall be estimated by the govt. in the prescribed manner. INSPECTOR 1. The appropriate =ovt, appoints inspector for different local limits. ". He is a public servant under the Indian :enal /ode. (. His powers are 9a' To ma,e en8uiry e#amination to ensure that the provisions of the .ct are observed. b' He may enter the premises of any establishment with his assistant to inspect and search the premises, for this purpose he has to give a reasonable notice. c' To re8uire the employer to produce any register or record maintained under the .ct. d' To ta,e into his custody any document or register or tota,e copies of such documents if he believes that the employer has committed any offence. 2. .n inspector is a public servant within the meaning of Indian :enal /ode. 5. Every employer has a duty to give all facilities to the inspector to perform his functions. CLAIM! 1. .ppropriate govt. appoints authority to hear and decide claims arising out of payment of less than the minimum wages&+>0'. ". )uch authority may be labour commissioner or wor,s committee commissioner or civil cout. (. The employee himself or any legal practitioner or officer of >egistered Trade Enion or an Inspector may file the claim before the authority.

11 2. Every claim application shall be presented within 4 months from the date when the minimum wages were payable, however if sufficient cause is shown a delayed application may be admitted. 5. If the authority is satisfied it shall direct the employer to pay the difference of wages to employee along with compensation upto 11 times the amount of difference. 4. )everal applications in respect of no. of employees may be treated by the authority as single application. )imilary any no. of employees may present a single application instead of filing separate application. CONTRACTING OUT .ny contract or agreement by which any employee gives up his right to +>0 shall be <E66 G I*I? as far as reduction in minimum wages is concerned.

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THE PAYMENT OF WAGES ACT 19"#

INTRODUCTION The preamble of the .ct states that the object of the .ct is Ato regulate the payment of wages to certain classes of employed persons.B The regulation contemplated by the .ct is twofold9 first the date of payment of wages and secondly the deductions from wages whether as fine or otherwise. To ensure payment of wages to persons covered by the .ct certain provisions have been made in this .ct. The Bombay High /ourt in .rvind +ills 6td v. K.>.=adgil, observed that Athe general purpose of the .ct is to provide that employed persons shall be paid their wages in a particular form and at regular intervals without any unauthori;ed deductionsB. The use of the e#pression Acertain classes of personsB in the preamble is important for the .ct applies to persons drawing on an average wages less than one thousand si# hundred rupees a month. .ny deduction from the wages or salaries of the wor,men governed by the :ayment of 0ages .ct, unless authori;ed by the .ct shall be deemed to be illegal. .ny deduction form the wages of the wor,men, under a settlement between representative Enion and employer can, however, permit a deduction as it is the outcome of an understanding between the parties even though such deduction may not be authori;ed or legally permissible under the .ct. The act was passed with the following objects $ 1' To ensure that the wages are paid in a particular form i.e. cash or che8ue. "' To ensure that the wages are paid at regular interval. (' To ensure that the wages are paid without unauthori;ed deduction. SCOPE AND APPLICATION The act e#tents to the whole of India, It is applicable to the employees of factories, railways and to industrial establishments. .ll present the act is applicable to the employee drawings wages upto >s.1411%- per month but this limit will be soon increased to 11,111%- per month. IMPORTANT DEFINATION INDUSTRIAL ESTABLISHMENT Industrial establishment includes tramway service, mine oil field, any wor, shop, construction and generation of electricity. The government can apply the act to any other establishment by publishing a notification.

1( WAGES9 0ages means all remuneration e#pressed in money or capable of being e#pressed in money which would be payable to employee in the terms of employment are fulfilled. It includes 9a' b' c' d' e' >emuneration payable under any settlement or order of court. 0ages for overtime wor, holidays .dditional remuneration as per employment terms. .ny sum payable on termination of employment. .ny sum payable under any scheme, under any law but does not include $ i' Bonus by profit sharing or not. ii' Ialue of house accommodation iii' Ialue of light, water, medical attendance etc. iv' Employer contribution to provident fund. v' Traveling allowance or concession. vi' .mount paid to meet special e#penses out of employment. vii' =ratuity.

RESPONSIBILITY FOR PAYMENT OF WAGES 1. ". (. 2. Every employer is responsible for payment of wages. +anager of factory. :erson responsible to the employer for supervision and control. . person nominated in railway establishment. .re the persons responsible for payment of wages.

WAGE PERIOD 0age period means the period for which the wages are paid. Every person responsible for payment of wages has to fi# wage periods for the establishment. <o wage period shall e#ceed one month. TIME OF PAYMENT OF WAGES 1. 0hen the number of employees in any factory or other establishment is less tan 1111 wages shall be paid on or before the e#piry of !th day after the wage period. ". If the number of employed person is more than 1111, on or before the e#piry of 11th day after the wage period. (. 0hen the services of employed person are terminated by employer wages will have to be paid before the e#piry of second wor,ing day from the date of termination. 2. 0hen the services of employed person are terminated due to closure of establishment wages shall be paid before the e#piry of second day. 5. The state government may ma,e rules for :0? or railways separately in this behalf.

12 4. .ll the wages shall be paid only on a wor,ing day. W$%&' () *& +$,- ,. /$'0 1' .ll wages shall be paid in current coin or current notes or both. "' .n employer may pay wages by che8ue or by crediting the accounts of employed person after obtaining written authori;ation from the employed person. DEDUCTIONS W0$( ,' -&-1/(,).' 2 a' Every payment made by an employed person to employer or his agent is deductions. b' 0ithholding of increment or promotion or reduction to lower post or suspension are the cases where wages are reduced however these are not deductions. c' .ll the deductions shall be made only as per the act and they may be of following types. FINE: 1. The act of misconduct for which fine may be imposed shall be approved by the state government and shall be notified for the information of all employed persons. ". <o fine shall be imposed until the employed person has been given an opportunity to defend himself against the proposed fine. (. In any wage period, the amount of fine shall not be more than (7 of wages. 2. <o fine shall be imposed on employed below 15 years of age. 5. 3ine cannot be recovered by installment or after 41 days from the day of imposing fine. 4. .ll the fines recover shall be recorded in a separate register and they shall be used for the purpose of labour welfare. DEDUCTION FOR ABSENCE FROM DUTY: a' If employed person is absent from place where he is re8uired to wor, such deduction can be made from his wages. b' The amount of such deduction shall be proportionate to the period of absence from duty. c' If 11 or more employed person remain absent without notice under a common understanding the employer may deduct on additional amount upto F days wages for such absence. d' If an employed person after remaining present at wor, place refuses to carryout his wor, without due reasons it shall be considered that he is absent and the deduction shall be made.

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DEDUCTION FOR DAMAGE OR LOSS: a' If damage or loss is caused to the employer by the neglect of employed person such deduction shall be made which shall not be more than amount of damage or loss. b' The employed person must be given an opportunity to defend himself and showcause against such deduction. c' .ll such deductions shall be recorded in a separate register. ?eduction for house accommodation supplied by the employer. ?eduction for services and amenities supplied by the employer authori;ed by the government9 a' )uch service must be accepted by the employed person as a part of terms of employment. b' The amount shall not e#ceed the value decided by the government. c' The supply of tools and raw material cannot be considered as services. ?eduction for recovery of advances and for adjustment of overpayments of wages. ?eduction for recovery of loans given from any labour welfare fund. ?eduction for housing loans approved by state government. ?eduction of Income-ta#. ?eduction for payment to co-operative societies approved by government. ?eductions made with the written authori;ation of employed person for payment of contribution to the labour welfare fund of any registered trade union or the employer. ?eductions made with the written authori;ation of employed person for payment of membership fees of a registered trade union. ?eductions for recovery of losses by a railway administration if the employed person accepts any fa,e currency note. ?eduction for recovery of losses by railway administration if the employed person incorrectly charges the fair or warehouse fees. ?eductions made with written authori;ation of employed person for contribution to prime ministers national relief fund or other fund specified by the government. ?eductions for contribution to any insurance scheme framed by the government for the benefit of employees.

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TOTAL DEDUCTION Total amount of deduction that can be made from the wages of an employed person any wage period shall not be more than $ 1. !57 of the wages, if the deductions include a deduction for payment to co-operative societies and ". 517 of the wages in other cases. INSPECTORS: 1. .n inspector appointed under the factories act is also the inspector under this act. He is the authority under the act for enforcing the provisions. ". He has a specific local area allotted to him. (. His powers are 9&a' To ma,e en8uiry G e#amination to ensure that the provisions of the act are observed. &b' He may enter the premises of any establishment with his assistant to inspect and search the premises for this purpose he has to give a reasonable notice. &c' To supervise the payment of wages to employed person. &d' To re8uire the employer to produce any register or record maintained under the act. &e' To ta,e into his custody any document or register or to ta,e copies of such documents if he believes that the employer has committed any offence. .n inspector is a public servant within the meaning of Indian :enal /ode Every employer has a duty to give all facilities to the inspector to perform his functions. CLAIMS 1. The state, government appoints AThe .uthorityB to hear and decide all claims arising out of deductions from wages or delay in payment of wages and all matter connected with such claim. ". )uch authority may be 6abour /ourt, Industrial Tribunal or /ivil Ludge or the /ommissioner under 0or,ers /ompensation .ct. (. . claim can be made to this authority $ &a' Employed person &b' 6egal :ractioner &c' *ffice bearer of trade union &d' Inspector.

1! 2. Every application has to be presented within 1" months from the date of cause of action however if sufficient reasons are given a delayed application may also be accepted. 5. The authority shall hear the applicant and the employer and shall ma,e necessary en8uiry. If satisfied it shall direct the refund of deduction or the payment of delayed wages. 4. The authority may direct payment of compensation upto 11 times theD amount of deduction. In case of delayed wages the compensation may be "5>s. !. <o compensation shall be payable on account of delayed wages if there is a bonafied error or an emergency or failure of employed person to accept payment. F. Every such authority has all such powers of /ivil /ourt for the purpose of recording evidence and compelling production of documents and attendance of witness. . )ingle claim in respect of a group &a' If a group of employed person from the same industrial establishment have a cause of action for the same wage period may present a single application in respect of any number of employed person such single application shall be treated as if it is separate application for all employed person. &b' The authority may treat such separate application pending before him as if they are a single application. &c' :ayment of Endisbursed &not distributed' &i' If the wages to an employed person cannot be paid on account of his death or because his whereabout are not ,nown, such wages shall be paid to the nominee of the employed person. &ii' 0hen there is no nomination the wages shall be deposited with the prescribed authority. &iii' .fter paying the nominee or the prescribed authority the duty of employer is over.

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PAYMENT OF BONUS ACT 19#3

The :ayment of Bonus .ct, 1 45 was enacted to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or productivity and for the matters connected therewith. The .ct applies to9- &i' every factory as defined under the 3actories .ct, 1 2FD and &ii' every other establishment in which twenty or more persons are employed on any day during an accounting year. However, the =overnment may, after giving two monthsM notification in the *fficial =a;ette, ma,e the .ct applicable to any factory or establishment employing less than twenty but not less than ten persons. The .ct is enforced through the /entral Industrial >elations +achinery &/I>+'. /I>+ is an attached office of the +inistry of 6abour and is also ,nown as the /hief 6abour /ommissioner &/entral' N/6/&/'O *rganisation. It is headed by the /hief 6abour /ommissioner &/entral'. The ,ey provisions of the .ct are9

.ccording to the .ct, the term MemployeeM means Pany person employed on a salary or wage not e#ceeding three thousand and five hundred rupees per mensem in any industry to do any s,illed or uns,illed manual, supervisory, managerial, administrative, technical or clerical wor, for hire or reward, whether the terms of employment be e#press or impliedP. .n employee is entitled to be paid by his employer a bonus in an accounting year subjected to the condition that he%she has wor,ed for not less than (1 wor,ing days of that year. .n employer shall pay minimum bonus at the rate of F.((7 of the salary or wages earned by an employee in an year or one hundred rupees,whichever is higher. Here it is not re8uired that the employer has any allocable surplus in the accounting year. However, where an employee has not completed fifteen years of age at the beginning of the accounting year, the minimum bonus payable is F.((7 or si#ty rupees, whichever is higher. In any accounting year, if the allocable surplus e#ceeds the amount of minimum bonus payable to the employees, the employer shall in lieu of such minimum bonus, be bound to pay bonus &ma#imum bonus' e8uivalent to the amount which shall not e#ceed "17 of the salary or wages earned by employees. In computing the allocable surplus, the amount set on or the amount set off shall be ta,en into account. In other words9- &i' If, in any accounting year, the allocable surplus e#ceeds the amount of ma#imum bonus payable to the employees in the establishment, then the e#cess surplus is carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year for the purpose of payment of bonusD or &ii' If there is no or less allocable surplus in respect of that year, then such a shortfall is carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year.

0here in any accounting year, any amount has been carried forward and set on or set off, then in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be ta,en into account. .ll amounts payable to an employee by way of bonus under this .ct shall be paid in cash by his employer within a month from the date on which the award become enforceable or the settlement comes into operation, in respect of any dispute regarding payment of bonus. But, in any other case, it shall be paid within a period of eight months from the close of the accounting year. However, the =overnment may order, upon receiving application made to it by the employer and for sufficient reasons, to e#tend the said period of eight months to such further period or periods as it thin,s fit, such that that the total period so e#tended shall not, in any case, e#ceed two years.

.n employee shall be dis8ualified from receiving bonus if he% she is dismissed from service for9- &i' fraudD or &ii' riotous or violent behaviour while on the premises of the establishmentD or &iii' theft, misappropriation or sabotage of any property of the establishment.

SCOPE AND APPLICATION The act e#tents to the whole of India and is applicable to 1' Every factory wherein 11 or more persons are employed with the aid of power. "' Every other establishment in which "1 or more persons are employed on any day during an accounting year. ESTABLISHMENT Establishment includes departments, underta,ings and branches, etc. The government may apply this act to any establishment having less than "1 employees provided there are at least 11 employees. The act does not apply to any underta,ing in public sector unless it competes with an underta,ing in private sector. )imilarly the act is not applicable to 6I/, ETI, colleges G universities, I?BI, ?oc, Jards, >ed /ross, /hambers of /ommerce, )ocial 0elfare Institutions.

IMPORTANT DEFINITIONS

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EMPLOYEE Employee means any person other than apprentice employed on salary not e#ceeding (511%- >s. per month to do any s,illed, uns,illed, manual, supervisory, managerial or clerical wor,. Thus, managers are also entitled to bonus however if an employee is drawing a salary more than (511%- per month he is not an employee under the act G he will not be entitled for Bonus. ELIGIBILITY FOR BONUS Every employee is entitled to Bonus if he wor,s for at least (1 days in that accounting year. )ec.F. DIS4UALIFICATIONS FOR BONUS .n employee shall be dis8ualified from receiving bonus if he is dismissed from service for1' "' (' 2' 3raud >iotous or violent behavior in the premises of establishment. Theft, misappropriation or sabotage of any property of the establishmentD or +isconduct of causing financial loss to the employer to the e#tent that bonus can be deducted for that year.

COMPONENTS OF BONUS )alary or wages includes dearness allowance but not other allowances e.g.over-time, house rent, incentive or commission. PAYMENT OF MINIMUM BONUS Every employer is bound to pay to every employee a minimum bonus which is F.((7 of the wages earned by the employee during the accounting year or >s.111%- whichever is more. If the employee is below 15 years of age the minimum bonus would be F.((7 of wages of >s.41%- whichever is higher. PAYMENT OF MAXIMUM BONUS 0hen in any accounting year allocable surplus e#ceeds amount of minimum bonus, the employer shall pay such higher bonus in proportion to the wages earned by employee in that account year subject to a ma#imum of "17.

"1 ACCOUNTING YEAR I( 5&$.'6 1' 3or a corporation it is a year ending on a day on which the boo,s and accounts of the corporation are to be are closed and balanced. "' 3or a company it is the year profit and loss act are finali;ed. &even if it may not be of 1"( months' (' In other cases the year beginning on 1st .pril. In any establish follows any other year as accounting year then such employer at his choice may adopt that accounting year. )uch choice is to e#ercised only once. CALCULATION WITH RESPECT TO CERTAIN EMPLOYEES 0here the salary or wages of an employee are more than "511%- per month the bonus payable to such employee shall be calculated assuming that his salary or wages are "5oo%per month only. AD7USTMENT OF CUSTOMORY BONUS There may be a practice followed by some employers of paying a pooja bonus of other customary bonus to employee. .n employer may also pay an advance amount of bonus to an employee. The act permits the employer to deduct the amount of bonus so paid and the employee shall receive only the balance. DEDUCTIONS FROM BONUS If an employee is found guilty causing any financial loss to the employer, the employer may deduct the amount of loss from the bonus payable for that accounting year only. Thus if the loss is more than the bonus it cannot be recover from the bonus payable for the subse8uent accounting year. TIME LIMIT FOR PAYMENT OF BONUS 0hen there is any dispute about bonus before any authority under this act, bonus has to be paid within one month from the date when the order of the authority comes into operation. In any other cases, within a period of F months from the close of the accounting year. RECOVERY OF BONUS 0here any money is due to an employee as bonus he or his heirs may ta,e an application to the authority under the act for the money. The authority after ma,ing the en8uiry shall issue a certificate for that amount to the collector who will recover the same as arrears of 6and >evenue. )uch application has to be made within one year however delayed application may be accepted if sufficient reasons for the delay are given.

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INSPECTOR The appropriate government may appoint such persons as it thin,s fit to be inspector under this act for specified local areas. His power are1' To re8uire an employer to give information% "' To enter the premises of any establishment along with assistance and re8uire account boo,s, registers etc to be produce before him. (' To put 8uestions to any person connected with the establishment. 2' To ma,e copies of any documents. 5' Every inspector is a public servant under Indian :inal /ode. AVAILABLE SURPLUS The available surplus for any accounting year means the gross profit for that year means the following amounts 1' :ermuted depreciation G "' ?evelopment rebate or investment allowance (' ?irect ta#es the employer is liable to pay. ALLOCABLE SURPLUS It is 4!7 or 417 of the available surplus it is 4!7 in case of company which has not made2 arrangement for payment ofD dividend out of profits as per income ta# act. In other cases it is 417. &Bonus is made out of allocable surplus SET ON & SET OFF OF ALLOCABLE SURPLUS Bonus is paid by employer even when it suffers from losses hence in an accounting year if the allocable surplus with him is more than amount of minimum bonus payable to employeesD he is allowed to carry forward that surplus amount to the subse8uent years for utili;ing the same for paying bonus. This is called set on. 0hen an employer has no allocable surplus with him heD has yet to pay bonus as per act. In such a case he is allowed to carry forward the deficiency to the subse8uent years to be adjusted against the profits%allocable surplus of subse8uent year. S+&/,$8 P9):,',).' ;,(0 9&'+&/( () N&;8< S&( 1+ E'($*8,'05&.(= 1. 0hen an establishment is newly setup, it is not loaded with the re8uirement of payment of bonus for certain number of initial years. This is to help the organi;ation become stable and strong. This initial period is ,nown as HI<3./<J JE.>C. ". In the first 5 accounting year, the employer is re8uired to pay bonus to his employees only for that accounting year in which he derives profit, the provisions of set-off and set-on is not applicable for that year. (. 3or the 4th and !th accounting year provision of set-on and set-off will be applicable.

"( 2. 3rom the Fth accounting year the set-on and set-off provisions will be regularly applicable and establishment shall be no longer a newly setup establishment. 5. .n establishment shall not be considered as a newly set-up establishment merely because there is change in its location, management, name or ownership. COMPUTATION OF NUMBER OF WOR ING DAYS 3or the purposes of section1(, an employee shall be deemed to have wor,ed in an establishment in any accounting year also on the days on which $ &a' he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment &)tanding *rders' .ct, 1 24 or under the Industrial ?isputes .ct,1 2!, or under any other law applicable to the establishmentD &b' he has been on leave with salary or wageD &c' he has been absent due to temporary disablement caused by accident arising out of and in the course of his employmentD and &d' the employee has been on maternity leave with salary or wage, during the accounting year. DISPUTES UNDER THE ACT 0here any dispute arises between an employer and his employees with respect to the bonus payable under this .ct or with respect to the application of this .ct to an establishment in public sector, then, such disputes shall be deemed to be an industrial dispute within the meaning of the Industrial ?isputes .ct, 1 2! or of any corresponding law relating to investigation and settlement of industrial disputes in force in a )tate and the provisions of that .ct or, as the case may be, such law, shall, save as otherwise e#pressly provided, apply accordingly. PENALTY If any person $ &a' contravenes any of the provisions of this .ct or any rule made there underD or &b' to whom a direction is given or a re8uisition is made under this .ct fails to comply with the direction or re8uisition, he shall be punishable with imprisonment for a term which may e#tend to si# months, or with fine which may e#tend to one thousand rupees, or with both.