Overview of Bonus (Amendment) Act, 2015

Bonus is paid based on profit earned by the company during the financial year. However, minimum bonus of 8.33 % was assured irrespective of profit earned or not. While so, the maximum bonus is fixed at 20 % and the balance is carried forward as set-on to cater the emergency for next years. In recent amendment, the bonus increase was declared retrospectively. Once the bonus is paid based on profit, after negotiation with employees representative, making it retrospective will make additional burden on employer. Therefore, the same is not fair and stay on retrospective effect is granted by Karnataka, Madras and few other High Courts. In addition, the bonus calculation is linked to Minimum wage. Since, the minimum wage differs from state-to-state, within the state zone-to-zone and industry-to-industry, bonus payment based on minimum wage will not be uniform within the state, region and industry. Therefore, linking of minimum wage act with bonus act will lead to disputes in the industry.