HUMAN

RESOURCE
MANAGEMENT

BONUS
By
Supriya lanka
 CONCEPT OF BONUS
• Bonus Is an extra payment to the workers
beyond normal wage.
• Bonus is a deferred wage which aims at
bridging the gap between actual wage and
need-based wage.
• Bonus is a share of the workers in the
prosperity of an organization.
• Bonus is primarily a share in the surplus.
• Bonus payments are common among
managerial and executive employees.
• But recent trends show that they are
increasingly given to employees throught out
the organization.
• Performance criteria
• Quality improvement and
• Cost reduction
• Motivational tool(performance bonus)
• Spot bonus.
 BONUS A LEGAL RIGHT
• Employees demanded the payment of bonus
with a view to bridging the gap between the
real wage and need-based wage.
• The government appointed the bonus
commission in dec,1961,with M.R.Mehar as its
chairman,because of the persisting demands
made by the employees and their trade
unions.
• The Bonus commission submitted its report in
the year 1964.
• Based on recommendations Payment of Bonus
act , 1965 came into existence.
 PAYMENT OF BONUS ACT
1965
• The government enacted the payment of
bonus act in September ,1965.
• The important provisions are:
1)60% of the surplus(67% in case of foreign
companies) should be allocated for the
payment of Bonus.
2)Salary for the purpose of Bonus means
Pay+DA.
3)Employees drawing up to Rs.1600 are eligible
for Bonus.if the amount of salary is beyond
Rs700 and up to Rs1600 it would be taken as
Rs700 for the purpose of bonus payment.
4)Employees dismissed for fraud, theft etc. are
disqualified for bonus.
5)Minimum bonus payable is 4% of the salary
or Rs.40 , whichever is higher.
6)if an employee is below 15years of age, the
Bonus payable is 4% of the salary or Rs25,
whichever is higher.
7)if the available surplus is not adequate to pay
the minimum bonus . It can be set off up to
maximum period of 4years.
8)if the available surplus is more than 20% of
the bonus,it can be ‘set on’ up to a maximum
period of 4years.
The employees and trade unions were not
satisfied with the 4% of minimum bonus and
demanded 8.33% minimum bonus.
the government appointed review committee
with B.K.Nadan as chairman in April,1972.
 AMENDMENT OF THE ACT IN
1972
1)according to amendment payment of bonus is
made compulsory , irrespective of profit or
loss.
2)The minimum bonus was increased to 8.33% of
the salary or Rs80 whichever is higher.
3)The bonus payable to the employees of less
than 15 years of age was also increased to
8.33% of the salary or Rs50 whichever is
higher.
4)Employees of non-competing public sector
undertakings are also eligible to get the
statutory bonus.
 AMENDMENT OF ACT
IN 1975.
• According to this amendment ,
1)The bonus is to be paid on the basis of profits
or productivity of the organization
2)The minimum bonus payable to the employees
was reduced to 4% of the salary or Rs.100 ,
whichever is higher in case of employees
below 15years of age.
3)maximum bonus was 20% of the salary.
 AMENDMENT OF THE
ACT IN 1977
1)The industrial undertaking covered by the act
to pay the minimum bonus of
8.33%,irrespective of profit or loss from the
year 1976.
2)investment allowance should be taken as prior
charge.
3)banking companies and industrial
reconstruction of bank of India are covered by
the act.
• The act was again amended in 1980.
1)all industrial units has to pay bonus ,
irrespective of allocable surplus in that
financial year.
2)The maximum bonus is 20% of the salary.
The act was amended again in 1985.
1)The employees whose salary is up to Rs2500
are eligible for bonus.
THANK YOU