THE PAYMENT OF BONUS ACT, 1965

• The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected therewith.
• The minimum bonus of 8.33% is payable by every industry and establishment under section 10 of the Act. The maximum bonus including productivity linked bonus that can be paid in any accounting year shall not exceed 20% of the salary/wage of an employee under the section 31 A of the Act.
• Details of amendments to the Payment of Bonus Act, 1965:

SL.No	Year of Amendment	Eligibility limit (Rs. Per Month)	Calculation ceiling(Rs. Per Month)
1.	1965	Rs. 1600	Rs.750
2.	1985	Rs.2500	Rs. 1600
3.	1995	Rs. 3500	Rs. 2500
4.	2007	Rs. 10000	Rs. 3500

The last amendment of 2007 was notified on 13 December 2007 and made effective from 1 April, 2006.

The minimum bonus of 8.33% of (Rs. 3500/- X 12= Rs. 42,000/-) is approximately Rs. 3500/-.

The 20% of above referred Rs. 42,000/- is Rs. 8,400/-. However, the limit is given as Rs. 8,300/-.

The clause (vi) of Section 32 of the Act has also been omitted to bring employees employed through contractors on building operations within the ambit of the Act.