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Mohammed Ali (Accountant)     22 August 2009


we are running a garment factory and currently the whole garment is under loss so we are not in a position to give the bounus for the year 2008-09.

is it mandatory to pay the bonus?

if we dont pay the bonus are we violating the labour laws plz help me its urgent


 4 Replies

badrinath (Sr.Manager-human resources)     25 August 2009

it is mandatory on the part of employer to pay bonus at 8.33 percent  even though the company is under loss.

sangram (service)     23 September 2009

I completely diagree with Mr. Badrinath

There is not any obligation of employer to pay the bonus to his employee.



Tushar Chowdhary (Lawyer/Consultant)     23 September 2009

I am  in complete favour of Mr. Badrinath as it is clearly mentioned in Section 10 of The Payment of Bonus Act, 1965 as " 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:"

Ashish Ovalekar (Manager Legal & Compliance)     24 September 2009

Dear Mohammed,

It would depend upon whether your company has completed five years from the date of incorporation. Because, there is an examption from paying Bonus for the first five years. Further you Company should have been making provisions for future liabilities in the Books of Accounts for liabilities such as Gratuity, and Statutory Bonus.

As per law, your Company would have to pay the Statutory Bonus @ 8.33% of Basic Wages.

I would suggest that if your Company is in real deep losses, try talking to the Workmen representatives, to have a deffered Bonus payment option, i.e. in 2 or 3 installments, and if agreeable, then convey to them in writing that as the Company has sufferred losses, the Company would be paying bonus in installments.

In my opinion, there are always means to resolve an issue peacfully, than to fall falt incase of non compliances, and face litigations and court cases.





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