P.G.

Department of Social Work

D.G.Vaisnhav College
Chennai-600 106

ASSINGMENT on
PAYMENT OF BONUS
THE ACT, 1965

Subject : LABOUR LAW

Submitted by-
KAVITA.S
&
NAVEEN PRASAD.H
 THE PAYMENT OF BONUS ACT, 1965

INTRODUCTION

The practice of paying bonus in India appears to have originated during

First World War when certain textile mills granted 10% of wages as war bonus to
their workers in 1917. In certain cases of industrial disputes demand for payment
of bonus was also included. In 1950, the Full Bench of the Labour Appellate
evolved a formula for determination of bonus. A plea was made to raise that
formula in 1959. At the second and third meetings of the Eighteenth Session of
Standing Labour Committee (G. O.I.) held in New Delhi in March/April 1960, it
was agreed that a Commission be appointed to go into the question of bonus and
evolve suitable norms. A Tripartite Commission was set up by the Government of
India to consider in a comprehensive manner, the question of payment of bonus
based on profits to employees employed in establishments and to make
recommendations to the Government. The Government of India accepted the
recommendations of the Commission subject to certain modifications. To
implement these recommendations the Payment of Bonus Ordinance, 1965 was
promulgated on 29th May, 1965. To replace the said Ordinance the Payment of
Bonus Bill was introduced in the Parliament.

1. Short title, extent and application

2. Definitions
3. Establishments to include departments, undertakings and branches
4. Computation of gross profits
5. Computation of available surplus
6. Sums deductible from gross profits
7. Calculation of direct tax payable by the employer
8. Eligibility for bonus
9. Disqualification for bonus
10. Payment of minimum bonus
11. Payment of maximum bonus
12. Calculation of bonus with respect to certain employees
13. Proportionate reduction in bonus in certain cases
14. Computation of number of working days
15. Set-on and set-off of allocable surplus
16. Special provisions with respect to certain establishments
17. Adjustment of customary or interim bonus against bonus payable under the
Act.
18. Deduction of certain amounts from bonus payable under the Act
19. Time-limit for payment of bonus
20. Application of Act to establishments in public sector in certain cases
21. Recovery of bonus due from an employer
22. Reference of dispute under this Act
23. Presumption about accuracy of balance-sheet and profit and loss account of
corporations and companies
24. Audited accounts of banking companies not to be questioned
25. Audit of accounts of employers, not being corporations or companies
26. Maintenance of registers, records, etc.
27. Inspectors
28. Penalty
29. Offences by companies
30. Cognizance of offences
31. Protection of action taken under the Act
31A.Special provision with respect to payment of bonus linked with production or
productivity
32. Act not to apply to certain classes of employees
33.Repealed
34.Effect of laws and agreements inconsistent with the Act
35.Saving
36.Power of exemption
37. Repealed
38.Power to makes rules
39.Application of certain laws not barred
40. Repeal and saving

Preamble- (21 of 1965)

[(Note:- Subs. by Act No.43 of 1977) An Act to provide for the payment of Bonus
to persons employed in certain establishments and for matters connected therewith]

Be it enacted by the Parliament in the sixteenth year of the Republic of India as

follows:

1. Short title, extent and application - (1) This Act may be called the Payment of
Bonus Act,1965
(2) It extends to the whole of India [Note: The words "except the State of Jammu
and Kashmir" omitted by Act 51 of 1970, Sec.2 and Schedule (w.e.f. 1st
September,1971).

(3) save as otherwise provided in this Act, it shall apply to -

(a) Every factory; and

(b) Every other establishment in which twenty or more persons are employed on
any day during an accounting year

(4) Save as otherwise provided in this Act, the provisions of this Act shall in
relation to a factory or other establishment to which this Act applies, have effect in
respect of the accounting year commencing on any day in the year 1964 and in
respect of every subsequent accounting year

(5) An establishment to which this Act applies [Note: The words, brackets, letter
and figure "under Cl. (b) of sub-section (3)" omitted by Act 23 of 1976, Sec.8
(w.e.f. 25th September, 1975)] shall continue to be governed by this Act
notwithstanding that the number of persons employed therein falls below twenty
[(Note: Ins. by Act 23 of 1976, Sec-3, (w.e.f. 25th September, 1975) or, as the case
may be, the number specified in the notification issued under the proviso to sub-
section (3)].

3. Establishments to include departments, undertakings and branches - Where

an establishment consists of different departments or undertakings or has branches,
whether situated in the same place or in different places, all such departments or
undertakings or branches shall be treated as parts of the same establishment for the
purpose of computation of bonus under this Act :

Provided that where for any accounting year a separate balance-sheet and profit
and loss account are prepared and maintained in respect of any such department or
undertaking or branch, then, such department or undertaking or breach shall be
treated as separate establishment for the purpose of computation of bonus under
this Act for that year, unless such department or undertaking or branch was
immediately before the commencement of that accounting year treated as part of
the establishment for the purpose of computation of bonus.

4. Computation of gross profits. - The gross profits derived by an employer from

an establishment in respect of any accounting year shall -

(a) In the case of a banking company, be calculated in the manner specified in the
First Schedule;

(b) In any other case, be calculated in the manner specified in the Second
Schedule.

5. Computation of available surplus - The available surplus in respect of any

accounting year shall be the gross profits for that year after deducting there from
the sums referred to in Sec.6.

Provided that the available surplus in respect of the accounting year commencing
on any day in the year 1968 and in respect of every subsequent accounting year
shall be the aggregate of -

(a) The gross profits for that accounting year after deducting therefrom the sums
referred to in Section 6 ; and
(b) An amount equal to the difference between -

(i) The direct tax, calculated in accordance with the provisions of Section 7, in
respect of an amount equal to the gross profits of the employer for the immediately
preceding accounting year; and

(ii) The direct tax, calculated in accordance with the provisions of Section 7, in
respect of an amount equal to the gross profits of the employer for such preceding
accounting year after deducting there from the amount of bonus which the
employer has paid or is liable to pay to his employees in accordance with the
provisions of this Act for that year.]

6. Sums deductible from gross profits - The following sums shall be deducted
from the gross profits as prior charges, namely:

(a) Any amount by way of depreciation admissible in accordance with the

provisions of sub-section (1) of Section 32 of the Income-tax Act, or in accordance
with the provisions of the agricultural Income-tax law, as the case may be

Provided that where an employer has been paying bonus of his employees under a
settlement or an award or agreement made before the 29th May, 1965, and
subsisting on that date after deducting from the gross profits notional normal
depreciation, then the amount of depreciation to be deducted under this clause
shall, at the option of such employer (such option to be exercised once and within
one year from that date) continue to be such notional normal depreciation;

(b) Any amount by way of [(Note: Subs. by Act 66 of 1980) development rebate or
investment allowance or development allowance] which the employer is entitled to
deduction from his income under the Income-tax Act ;
(c) Subject to the provisions of Section 7, any direct tax which the employer is
liable to pay for the accounting year in respect of his income, profits and gains
during the year ;

(d) Such further sums as are specified in respect of the employer in the.

7. Calculation of direct tax payable by the employer - Any direct tax payable by
the employer] for any accounting year shall, subject to the following provisions, be
calculated at the rates applicable to the income of the employer for that year,
namely :

(a) In calculating such tax no account shall be taken of -

(i) Any loss incurred by the employer in respect of any previous accounting year
and carried forward under any law for time being in force relating to direct taxes

(ii) Any arrears of depreciation which the employer is entitled to add to the amount
of the allowance for depreciation for any following accounting year or years under
sub-section (2) of Section 32 of the Income-tax Act

(iii) Any exemption conferred on the employer under Section 84 of the Income-tax
Act or of any deduction The Orient Tavern which he is entitled under sub-section
(1) of Section 101 of that Act, as in force immediately before the commencement
of the Finance Act, 1965 (10 of 1965)

(b) Where the employer is a religious or a charitable institution to which the

provisions of Section 32 do not apply and the whole or any part of its income is
exempt from tax under the Income-tax Act, then, with respect The Orient Tavern
the income so exempted, such institution shall be treated as if it were a company in
which the public are substantially interested within the meaning of that Act ;
(c) Where the employer is an individual or a Hindu undivided family, the tax
payable by such employer under the Income-tax Act shall be calculated on the
basis that the income derived by him from the establishment is his only income ;

(d) Where the income of any employer includes any profits and gains derived from
the export of any goods or merchandise out of India any rebate on such income is
allowed under any law for the time being in force relating to direct taxes, then, no
account shall be taken of such rebate ;

(e) No account shall be taken of any rebate [(Note: Subs. by Act 66 of 1980) other
than development rebate or investment allowance or development allowance)] or
credit or relief or deduction (not hereinafter mentioned in this section) in the
payment of any direct tax allowed under nay law for the time being in force
relating to direct taxes or under the relevant annual Finance Act, for the
development of any industry.

8. Eligibility for bonus - Every employee shall be entitled to be paid by his

employer in an accounting year, bonus, in accordance with the provisions of this
Act, provided he has worked in the establishment for not less than thirty working
days in that year.

9. Disqualification for bonus - Notwithstanding anything contained in this Act, an

employee shall be disqualified from receiving bonus under this Act, if he is
dismissed from service for-

(a) Fraud; or

(b) Riotous or violent behavior while on the premises of the establishment; or

(c) Theft, misappropriation or sabotage of any property of the establishment.

10. Payment of minimum bonus - Subject to the other provisions of this Act,
every employer shall be bound to pay to every employee in respect of the
accounting year commencing on any day in the year 1979 and in respect of every
subsequent accounting year, a minimum bonus which shall be 8.33 per cent of the
salary or wage earned by the employee during the accounting year or one hundred
rupees, whichever is higher, whether or not the employer has any allocable surplus
in the accounting year

Provided that there an employee has not employed fifteen years of age at the
beginning of the accounting year, the provision of this section shall have effect in
relation to such employee as if for the words "one hundred rupees", the words
"sixty rupees" were substituted.

11. Payment of maximum bonus - (1) Where in respect of any accounting year
referred to in Sec.10, the allocable surplus exceeds the amount of minimum bonus
payable to the employees under that section, the employer shall, in lieu of such
minimum bonus, be bound to pay to every employee in respect of that accounting
year bonus which shall be an amount in proportion to the salary or wage earned by
the employee during the accounting year subject to a maximum of twenty per cent
of such salary or wage.

(2) In computing the allocable surplus under this section, the amount set on or the
amount set-off under the provisions of Sec.15 shall be taken into account in
accordance with the provisions of that section.

12. Calculation of bonus with respect to certain employees - Where the salary
or wage of an employee exceeds one thousand and six hundred rupees per menses,
the bonus payable to such employee under Sec.10, or as the case may be, under
Sec.11, shall be calculated as if his salary or wage were one thousand and six
hundred rupees per menses.

13. Proportionate reduction in bonus in certain cases - Where an employee has

not worked for all the working days in an accounting year, the minimum bonus of
one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher
than 8.33 per cent of his salary or wage for the days he has worked in that
accounting year, shall be proportionately reduced.

14. Computation of number of working days. - For the purposes of Sec. 13, an
employee shall be deemed to have worked 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 (Standing Orders) Act, 1946 (20 of 1946), or
under the Industrial Disputes Act, 1947 (14 of 1947) or under any other law
applicable to the establishment ;

(b) He has been on leave with salary or wage

(c) He has been absent due to temporary disablement caused by accident arising
out of and in the course of his employment; and

(d) The employee has been on maternity leave with salary or wage, during the
accounting year.

15. Set-on and set-off of allocable surplus - (1) Where for any accounting year,
the allocable surplus exceeds the amount of maximum bonus payable to the
employees in the establishment under Sec.11, the, the excess shall, subject to a
limit of twenty per cent of the total salary or wage of the employees employed in
the establishment in that accounting year, be carried forward for being set-on in the
succeeding accounting year and so on up to and inclusive of the fourth accounting
year to be utilized for the purpose of payment of bonus in the manner illustrated in
the Fourth Schedule.

(2) Where for any accounting year, there is no available surplus or the allocable
surplus in respect of that year falls short of the amount of minimum bonus payable
to the employees in the establishment under Section 10, and there is no amount or
sufficient amount carried forward and set on under sub-section (1) which could be
utilized for the purpose of payment of the minimum bonus, then, such minimum
amount or the deficiency, as the case may be, shall be carried forward for being
set-off in the succeeding accounting year and so on up to and inclusive of the
fourth accounting year in the manner illustrated in the Fourth Schedule.

(3) The principle of set-on and set-off as illustrated in the Fourth Schedule shall
apply to all other cases not covered by sub-section (1) or sub-section (2) for the
purpose of payment of bonus under this Act.

(4) Where in any accounting year any amount has been carried forward and set-on
or set-off under this section, 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 taken into account.

16. Special provisions with respect to certain establishments - (1) Where an

establishment is newly set up, whether before or after the commencement of this
Act, the employees of such establishment shall be entitled to be paid bonus under
this Act in accordance with the provisions of sub-section (1-A), (1-B) and (1-C).
(1-A) In the first five accounting years following the accounting year in which the
employee sells the goods produced or manufactured by him or renders services, as
the case may be, from such establishment, bonus shall be payable only in respect
of the accounting year in which the employer derives profit from such
establishment and such bonus shall be calculated in accordance with the provisions
of this Act in relation to that year, but without applying the provisions of Sec.15.

(1-B) For the sixth and seventh accounting years following the accounting year in
which the employer sells the goods produced or manufactured by him or renders
services, as the case may be, from such establishment, the provisions of Sec.15
shall apply subject to the following modifications namely :

(i) For the sixth accounting year -

Set on or set-off, as the case may be, shall be made in the manner illustrated in the
taking into account the excess or deficiency, if any, as the case may be, of the
allocable surplus set-on or set-off in respect of the fifth and sixth accounting year ;

(ii) For the seventh accounting year -

Set-on or set-off, as the case may be, shall be made in the manner illustrated the
taking into account the excess of deficiency, if any, as the case may be, of the
allocable surplus set-on or set-off in respect of the fifth, sixth and seventh
accounting years.

(1-C) From the eighth accounting year following the accounting year in which the
employer sells the goods produced or manufactured by him or renders services, as
the case may be, from such establishment, the provisions of Sec.15 shall apply in
relation to such establishment as they apply in relation to any other establishment.
Explanation I - For the purpose of sub-section (1), an establishment shall not be
deemed to be newly set up merely by reason of a change in its location,
management, name or ownership.

Explanation II - For the purpose of sub-section (1-A), an employer shall not be

deemed to have derived profit in any accounting year unless -

(a) He has made provision for that year's depreciation, to which he is entitled under
the Income-tax Act or, as the case may be, under the agricultural income-tax law ;
and

(b) The arrears of such depreciation and losses incurred by him in respect of the
establishment for the previous accounting years have been fully set-off against his
profits.

Explanation III - For the purposes of sub-sections (1-A), (1-B) and (1-C) sale of
the goods produced or manufactured during the course of the trail running of any
factory or of the prospecting stage or an oil-field shall not be taken into
consideration and where any question arises with regard to such production or
manufacture, the decision of the appropriate Government, made after giving the
parties reasonable opportunity of representing the case, shall be final and shall not
be called in question by any court or other authority.]

(2) The provisions of [(Note: Subs. by Act 23 of 1976, (w.e.f. 25th September,
1975) sub-sections (1), (1-A), (1-B) and (1-C) shall, so far as may be, apply to new
departments or undertakings or branches set up by existing establishments :

Provided that if an employer in relation to an existing establishment consisting of

different departments or undertakings or branches (whether or not in the same
industry) set up at different periods has, before the 29th May, 1965, been paying
bonus to the employees of all such departments or undertakings or branches
irrespective of the date on which such departments or undertakings or branches
were set up, on the basis of the consolidated profits computed in respect of all such
departments or undertakings or branches, then, such employer shall be liable to pay
bonus in accordance with the provisions of this Act to the employees of all such
departments or undertakings or branches (whether set up before or after that date)
on the basis of the consolidated profits computed as aforesaid.

17. Adjustment of customary or interim bonus against bonus payable under

the Act. - Where in any accounting year -

(a) An employer has paid any puja bonus or other customary bonus to an
employees; or

(b) An employer has paid a part of the bonus payable under this Act to an
employee before the date on which such bonus becomes payable;

Then, the employer shall be entitled to deduct the amount of bonus so paid from
the amount of bonus payable by him to the employee under this Act in respect of
that accounting year and the employee shall be entitled to receive only the balance.

18. Deduction of certain amounts from bonus payable under the Act. - Where
in any accounting year, an employee is found guilty of misconduct causing
financial loss to the employer, then, it shall, be lawful for the employer to deduct
the amount of loss from the amount of bonus payable by him to the employee
under this Act in respect of that accounting year only and the employee shall be
entitled to receive the balance, if any.
19. Time-limit for payment of bonus - payable to an employee by way of bonus
under this Act shall be paid in cash by hi employer.

(a) Where there is a dispute regarding payment of bonus pending before any
authority under Sec.22, within a month from the date on which the award becomes
enforceable or the settlement comes into operation, in respect of such dispute;

(b) In any other case, within a period of eight months from the close of the
accounting year

20. Application of Act to establishments in public section in certain cases - If in

any accounting year an establishment in public section sells any goods produced or
manufactured by it or renders any services, in competition with an establishment in
private sector, and the income from such sale or services or both is not less than
twenty per cent of the gross income of the establishment in public sector for that
year, then, the provisions of this Act shall apply in relation to such establishment in
public sector as they apply in relation to a like establishment in private sector.

21. Recovery of bonus due from an employer - Where any money is due to an
employee by way of bonus from his employer under a settlement or an award or
agreement, the employee himself, or any other person authorized by him in writing
in this behalf, or in the case of the death of the employee, his assignee or heirs
may, without prejudice to any other mode of recovery made an application to the
appropriate Government for the recovery, of the money due to him, and if the
appropriate Government or such authority as the appropriate Government may
specify in this behalf is satisfied that any money is so due, it shall issue a certificate
for that amount to the Collector who shall proceed to recover the same in the same
manner as an arrear of land revenue.
22. Reference of dispute under this Act. - Where any dispute arises between an
employer and his employees with respect to the bonus payable under this Act or
with respect to the application of this Act to an establishment in public sector, then,
such dispute shall be deemed to be an industrial dispute within the meaning of the
Industrial Dispute Act, 1947 (14 of 1947), or of any corresponding law relating to
investigation and settlement of industrial disputes in force in a State and the
provisions of that Act or, as the case may be, such law, save as otherwise expressly
provided, apply accordingly.

23. Presumption about accuracy of balance-sheet and profit and loss account
of corporations and companies - (1) Where, during the course of proceedings
before any arbitrator or tribunal under the Industrial Disputes Act, 1947 (14 of
1947), or under any corresponding law relating to investigation and settlement of
industrial disputes in force in a State (hereinafter in this section referred to as the
"said authority") to which any dispute of he nature specified in Sec.22 has been
referred, the balance-sheet and the profit and loss account of an employer, being a
corporation or a company (other than a banking company), duly audited by the
Comptroller and Auditor-General of India or by auditors duly qualified to act as
auditors of companies under sub-section (1) of Sec.226 of the Companies Act,,
1956 (1 of 1956), are produced before it, then the said authority may presume the
statements and the particulars contained in such balance-sheet and profit and loss
account to be accurate and it shall not be necessary for the corporation or the
company to prove the accuracy of such statements and particulars by the filing of
an affidavit or by any other mode:

Provided that where the said authority is satisfied that the statements and
particulars contained in the balance-sheet or the profit and loss account of the
corporation or the companies are not accurate, it may take such steps as it thinks
necessary to find out the accuracy of such statements and particulars.

(2) When an application is made to the said authority by any trade union being a
party to the dispute or where there is not trade union, by the employees being a
party to the dispute, requiring any clarification relating to any item in the balance-
sheet or the profit and loss account, it may, after satisfying itself that such
clarification is necessary, by order, direct the corporation or, as the case may be,
the company, to furnish to the trade union or the employees such clarification
within such time as may be specified in the direction and the corporation or, as the
case may be, the company shall comply with such direction.

24. Audited accounts of banking companies not to be questioned - (1) Where

any dispute of the nature specified in Sec.22 between an employer, being a banking
company, and its employees has been referred to the said authority under that
section and during the course of proceedings the accounts of the banking company
duly audited are produced before it, the said authority shall not permit any trade
union or employees to question the correctness of such accounts, but the trade
union or the employees may be permitted to obtain from the banking company
such information as is necessary for verifying the amount of bounds due under this
Act.

(2) Nothing contained in sub-section (1) shall enable the trade union or the
employees to obtain any information which the banking company is not compelled
to furnish under the provisions of Sec. 34-A of the Banking Regulation Act, 1949
(10 of 1949).
25. Audit of accounts of employers, not being corporations or companies - (1)
Where any dispute of the nature specified in Section 22 between an employer, not
being a corporation or a company, and his employees has been referred to the said
authority under that section and the accounts of such employer audited by any
auditor duly qualified to act as auditor of Companies under sub-section (1) of
Section 226 of the Companies Act, 1956 (1 of 1956), are produced before the said
authority, the provisions of Section 23, shall, so far as may be, apply to the
accounts so audited.

(2) When the said authority finds that the accounts of such employer have not been
audited by any such auditor and it is of opinion that an audit of the accounts of
such employer is necessary for deciding the question referred to it, then it may, by
order, direct the employer to get his accounts audited within such time as may be
specified in the direction or within such further time as it thinks fit and thereupon
the employer shall comply with such direction.

(3) Where an employer fails to get the accounts audited under sub-section (2) the
said authority may, without prejudice to the provisions of Sec.28 get the accounts
audited by such auditor or auditors as it thinks fit.

(4) When, the accounts are audited under sub-section (2) or sub-section (3) the
provisions of Sec.23 shall, so far as may be, apply to the accounts so audited.

(5) The expenses of, and incidental to, any audit under sub-section (3) (including
the remuneration of the auditor or auditors) shall be determined by the said
authority (which determination shall be final) and paid by the employer and in
default of such payment shall be recoverable from the employer in the manner
provided in Sec.21
26. Maintenance of register, records, etc. - Every employer shall prepare and
maintain such registers, records and other documents in such form and in such
manner as may be prescribed.

27. Inspectors - (1) The appropriate Government may, by notification in the

official Gazette, appoint such persons as it thinks fit to be Inspectors for the
purpose of this Act and may define the limits within which they shall exercise
jurisdiction.

(2) Require an employer to furnish such information as he may consider necessary

(a) At any reasonable time and with such assistance, if any, as he thinks fit, enter
any establishment or any premises connected therewith and require any one found
in charge thereof to produce before him for examination any accounts, books,
registers and other documents relating to the employment of persons or the
payment of salary or wage or bonus in the establishment;

(b) Examine with respect to any matter relevant to any of the purposes aforesaid,
the employer, his agent or servant or any other person found in charge of
establishment or any premises connected therewith or any person whom the
Inspector has reasonable cause to believe to be or to have been an employee in the
establishment ;

(c) Make copies of, or take extracts from, any book, register or other document
maintained in relation to the establishment

(d) Exercise such other powers as may be prescribed.

(3) Every Inspector shall be deemed to be a public servant within the meaning of
the Indian Penal Code (45 of 1860).
(4) An person required producing any accounts, book, register or other document
or to give information by an Inspector under sub-section (1) shall be legally bound
to do so.

28. Penalty - If any person -

(a) Contravenes any of the provisions of this Act or any rule made there under; or

(b) To whom a direction is given or a requisition is made under this Act fails to
comply with the direction or requisition.

He shall be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to one thousand rupees, or with both.

29. Offences by companies - (1) If the person committing an offence under this
Act is a company, every person who, at the time the offence was committed, was
in charge of, and was responsible to, the company for the conduct of business of
the company, as well as the company, shall be deemed to be guilty of the offence
and shall be liable to be proceeded against and punished accordingly:

provided that nothing contained in sub-section (1), where an offence under this Act
has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to any neglect on
the part of, any director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be proceeded against and
punished accordingly.

Explanation - For the purposes of this section -

(a) "Company" means any body corporate and includes a firm or other association
of individuals and

(b) "Director", in relation to a firm, means a partner in the firm.

30. Cognizance of offences:- (1) No court shall take cognizance of any offence
punishable under this Act, save on complaint made by or under the authority of the
appropriate Government,

(2) No Court inferior to that of a presidency magistrate or a magistrate of the first

class shall try any offence publishable under this Act.
(i) Employees employed by any insurer carrying on general insurance business and
the employees employed by the Life Insurance Corporation of India

(ii) Seaman as defined in Cl. (42) of Sec.3 of the Merchant Shipping Act, 1958 (44
of 1958)

(iii) Employees registered or listed under any scheme made under the Dock
Workers (Regulation of Employment) Act, 1948 (9 of 1948), and employed by
registered or listed employers

(iv) Employees employed by an establishment engaged in any industry carried on

by or under the authority of any department of the Central Government or a State
Government or a local authority

(v) Employees employed by -

(a) The Indian Red Cross Society or any other institution of a like nature (including
its branches)

(b) Universities and other educational institutions

(c) Institutions (including hospitals, chambers of commerce and society welfare
institutions) established not for purposes of profit

(i) Employees employed through contractors on building operations

(ii) omitted by Act 66 of 1980, (w.e.f. 21st August, 1980)

(iii) Employees employed by the Reserve Bank of India

(iv) Employees employed by -

(a) The Industrial Finance Corporation of India;

(b) By Financial Corporation established under Sec.3, or any Joint Financial

Corporation established under Sec. 3-A of the State Financial Corporations Act,
1951 (63 of 1951) ;

(c) The Deposit Insurance Corporation;

(d) the National Bank for Agriculture and Rural Development

(e) the Unit Trust of India ;

(f) the Industrial Development Bank of India;

(g) Any other financial institution Other than a banking company, being an
establishment in public sector, which the Central Government may, by notification
in the official Gazette, specify having regard to -

(i) Its capital structure

(i) Its objectives and the nature of its activities

(ii) The nature and extent of financial assistance or any concession given to it by
the Government; and

(iii)Any other relevant factor ;

(i) (Note: Clause (x) omitted by Act 23 of 1976, Sec.20, (w.e.f. 25th September,
1975)

(ii) Employees employed by inland water transport establishments operating on

routes passing through any other country.

33. [Act to apply of certain pending dispute regarding payment of bonus.] Rep. by
the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), Section 21 (w.e.f.
25th September, 1975).

34. Employees and employers not to be precluded from entering into

agreements for grant of bonus under a different formula. - Nothing contained
in this Act shall be construed to preclude employees employed in any
establishment or class of establishments from entering into agreements with their
employer for granting them an account of bonus under a formula which is different
for that under this Act

Provided that no such agreement shall have effect unless it is entered into with the
previous approval of the appropriate Government
Provided further that any such agreement whereby the employees relinquish their
right to receive the minimum bonus under sub-section (2-A) of Section 10 shall be
null and void in so far as it purports to deprive them of such right

Provided also that such employees shall not be entitled to be paid bonus in excess
of -

(a) 8.33 per cent of the salary or wage earned by them during accounting year if the
employer has no allocable surplus in the accounting year or the amount of such
allocable surplus is only so much that, but for the provisions of sub-section (2-A)
of Section 10, it would entitle the employees only to receive an amount of bonus
which is less than the aforesaid percentage, or

(b) Twenty per cent, of the salary or wage earned by them during the accounting
year.

34-A. - Effect of laws and agreements inconsistent with the Act. - Subject to the
provisions of Sections 31-A and 34, the provisions of this Act shall have effect
notwithstanding anything inconsistent therewith contained in any other law for the
time being in force or in the terms of any award, agreement, settlement or contract
of service.

35. Saving - Nothing contained in this Act shall be deemed to affect the provisions
of the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (46 of 1948), or
of any scheme made there under.

36. Power of exemption - If the appropriate Government, having regard to the

financial position and other relevant circumstances of any establishment or class of
establishments, is of opinion that it will not be in public interest to apply all or any
of the provisions of this Act thereto, it may, by notification in the official Gazette,
exempt for such period as may be specified therein and subject to such conditions
as it may think fit to impose, such establishment or class of establishments from all
or any of the provisions of this Act.

37. [Power to remove difficulties] Rep. by the Payment of Bonus (Amendment)

Act, 1976 (23 of 1976), Section 23 (w.e.f. 25th September, 1975).

38. Power of make rules. -

(1) The Central Government may make rules for the purpose of carrying into effect
the provision of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power,
such rules may provide for -

(a) The authority for granting permission under the proviso to sub-clause (iii) of
Cl. (I) of Sec.2

(b) The preparation of registers, records and other document and the form and
manner in which such registers, records and documents may be maintained under
Sec.26 ;

(c) The powers which may be exercised by an inspector under Cl. (e) of sub-
section (2) of Sec.27

(d) Any other matter which is to be, or may be prescribed.

(3) Every rule made under this section shall be laid as soon as may be after it is
made, before each House of Parliament while it is in session for a total period of
thirty days, which may be comprised in one session and if before the expiry of the
session immediately following the session or the successive sessions aforesaid],
both Houses agree in making any modification in the rule or both Houses agree
that the rule should not be made, the rule shall thereafter have effect only in such
modified form or be of no effect as the case may be; so however, that any such
modification or annulment shall be without prejudice to the validity of anything
previously done under that rule.

39. Application of certain laws not barred. - Save as otherwise expressly

provided, the provisions of this Act shall be in addition to and not in derogation of
the industrial Disputes Act, 1947 (14 of 1947) or any corresponding law relating
The Orient Tavern investigation and settlement of industrial disputes in force in a
State.

40. Repeal and saving –

(1) The Payment of Bonus Ordinance, 1965 (3 of 1965) is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the said
Ordinance shall be deemed to have been done or taken under this Act as if this Act
commenced on the 29th May, 1965.
 BIBLIOGRAPHY

1. Element of labor law by N.D.Kapoor

2. Handbook for laws and legislations by P.L.Malik

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