The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production. The Act applies to the persons employed in every factory and establishment employing not less than 20 persons on any day during the accounting year. The establishment, once covered under the Act, continues to pay bonus in accordance with the provisions of the Act, even if the number of employees falls below 20 persons subsequently.
The employee becomes eligible to paid bonus under the law, irrespective of whether the terms of employment are express or employed or he is manager or a supervisor or administrative employee, if the salary or wages drawn by the employee does not exceed Rs.21,000/-per month. In the case of employees whose salary is above Rs.7,000/- and below Rs.21000/-, their salary shall be deemed as Rs.7000/- or the minimum wages fixed by the appropriate Government, whichever is higher. The employee must also have also worked for at least 30 days in respect of the year in which bonus is paid. The Act is not applicable to an apprentice engaged by the employer for hire or reward.