Festival bonanza: Govt raises salary limit for bonus

Festival bonanza: Govt raises salary limit for bonus

New Delhi: Ahead of the festival season, the government on 1 October handed a bonanza to millions of industrial workers by approving changes to the Bonus Act, which would make workers drawing up to Rs10,000 monthly salary eligible for annual bonus.

Hitherto, only those drawing a monthly salary of up to Rs3,500 were eligible to claim bonus.

The Cabinet has approved the amendment to Section 12 “to raise the eligibility limit for payment of bonus from the salary or wage of Rs3,500 to Rs10,000 per month," Labour Minister Oscar Fernandes told reporters.

He said construction workers, even if they have worked for a month with builders or contractors, would also be eligible to avail a proportional bonus from their employers.

The decision would benefit seven per cent of the total workforce in the country, which is working in the organised sector, said the Minister.

The payout proposal is broadly in line with recommendations of the 41st session of the Indian Labour Conference (ILC) held in April this year, and is the result of a long-pending demand of the trade unions, particularly the CPI(M)-affiliated Centre for Indian Trade Unions (CITU).

Sources said since the next session of Parliament would be called in November, government may bring an ordinance for the purpose.

Though the minister declined to comment on the financial implications of the decision, sources said the government had paid between Rs300 crore and Rs350 crore last year on account of ad hoc bonus at a maximum Rs2,467 per employee.