The High Court of Karnataka on Tuesday stayed the retrospective operation of the Payment of Bonus (Amendment) Act, 2015, which enhanced the monthly bonus calculation ceiling to Rs. 7,000 a month from Rs. 3,500 a month with effect from April 1, 2014.
Justice A.S. Bopanna passed the interim order on a petition filed by the Karnataka Employers’ Association. However, the court allowed implementation of the new Act from 2015-16 subject to final outcome of the petition.
The petitioner had contended that the implementation of the amended provision with retrospective effect from 2014 would impose huge financial burden on employers as they have to pay arrears for the previous year even though the accounts for 2014-15 were finalised, audited, approved in the general body meetings, dividends paid, and so on. Pointing out that the new Act enhanced the eligibility limit for payment of bonus from the salary of an employee from Rs. 10,000 a month to Rs. 21,000, the petitioner argued that now several other employees would be eligible for bonus with retrospective effect from the financial year 2014-15, which is unreasonable and arbitrary.
The Payment of Bonus Act, 1965 is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year, and amendment to enhance the bonus was carried out based on the assurances given by the Centre after 10 central trade unions went on a strike on September 2, 2015.
