The Payment of Bonus Act, 1965
Bare Act
Where in any accounting year -
-
an employer has paid any puja bonus or other customary bonus to an employee; or
-
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.
Simplified Act
If in a financial year:
- An employer has given a festival or traditional bonus to an employee; or
- An employer has already paid a part of the yearly bonus to an employee before the official dat… Read the complete text with KanoonGPT Pro.
Explanation using examples
Imagine a scenario where a company, ABC Corp, celebrates a local festival, Diwali, by giving a 'Diwali bonus' to its employees in October. This bonus is a customary practice and not calculated according to the Payment of Bonus Act, 1965.
Later, when the annual bonus is calculated as per the Act at the end of the financial year in March, ABC Corp can deduct the amount of Diwali bonus already paid from the total bonus amount due under the Act. If an employee received Rs. 2,000 as Diwali bonus and is entitled to Rs. 5,000 as per the Act, the employer can deduct the Rs. 2,000, and the employee would then receive the remaining Rs. 3,000 as the final bonus payout.
