Explain the eligibility and disqualification for receiving bonus under the payment of bonus act 1965.

Section 8 provides criteria for the eligibility for bonus. Every employee receiving salary or wages upto 10,000 per month and engaged in any kind of work whether skilled, unskilled, managerial, supervisory, manual, etc., is entitled to bonus for every accounting year, if he has worked at least for 30 working days in that year. An apprentice is not eligible for bonus. In case of an employee receiving salary or wages between  3,500 and 10,000 per month, the bonus payable to him is to be calculated as if his salary or wages were 3,500 per month.

Eligibility as decided in Judicial Decisions. An employee in the following cases is entitled to bonus:
  1. A temporary workman is entitled to bonus on the basis of total number of days worked by him.
  2. An employee of a seasonal factory is entitled to proportionate bonus and not the minimum bonus as prescribed under Section 10 of the Act.
  3. A part time employee as a sweeper engaged on a regular basis is entitled to bonus.
  4. A retrenched employees is eligible to get bonus provided he has worked for minimum qualifying period.
  5. A probationer is an employee and as such is entitled to bonus.
  6. A dismissed employee reinstated with back wages is entitled to bonus
  7. A piece-rated worker is entitled to bonus.

Disqualification for receiving bonus under ‘The Payment of Bonus Act, 1965’ : An employee shall be disqualified from receiving bonus under the Payment of Bonus Act, 1965, if he is dismissed from service for

  • Fraud, or
  • Riotous or violent behavior while on the premises of the establishment, or
  • Theft, misappropriation or sabotage of any property of the establishment. (Section 9)

Disqualifications as decided in Judicial Decisions: An employee, in the following cases, is not entitled to bonus:

  1. An apprentice is not entitled to bonus.
  2. An employee employed through contractors on building operations is not entitled to bonus (Section 32).
  3. An employee who is dismissed from the service on the ground of misconduct as mentioned in Section 9, is disqualified for any bonus and not merely for bonus of the accounting year in which he is dismissed.
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