The Payment of Bonus Act, 1965 -Labour Laws – UGC NET Paper 2 Code:55

31. Protection of action taken under the Act

No suit, prosecution or other legal proceeding shall lie against the government or any officer of the government for anything which is in good faith done or intended to be done in pursuance of this Act or any rule made thereunder.

31A. Special provision with respect to payment of bonus linked with production or productivity

Notwithstanding anything contained in this Act,-

(i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of bonus (Amendment) Act, 1976, (23 of 1976), or

(ii) where the employees enter into any agreement or settlement with their employer after such commencement, for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive bonus due to them under such agreement or settlement, as the case may be:

6[PROVIDED that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under section 10 shall be null and void in so far as it purports to deprive them of such right:

26[PROVIDED FURTHER that] such employees shall not be entitled to be paid such bonus in excess of twenty per cent of the salary or wages earned by them during the relevant accounting year.]

32. Act not to apply to certain classes of employees

Nothing in this Act shall apply to,-

(i) 27[employees employed by any insurer carrying on general insurance business and the] employees employed by the Life Insurance Corporation of India;

(ii) seamen as defined in clause (42) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958);

(iii) employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948, (9 of 1948), and employed by registered or listed employers;

(iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority;

(v) employees employed by,-

(a) the Indian Red Cross Society or any other institution of a like nature (including its branches);

(b) universities and other educational institutions;

(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;

(vi) employees employed through contractors on building operations;

(vii) employees employed by the Reserve Bank of India;

(viii) employees employed by,-

(a) the Industrial Finance Corporation of India;

(b) any financial corporation established under section 3, or any joint financial corporation established under Section 3A, of the State Financial Corporations Act, 1951 (63 of 1951);

(c) the Deposit Insurance Corporation;

28[(d) The National Bank of Agriculture and Rural Development;]

(e) the Unit Trust of India;

(f) the Industrial Development Bank of India;

29[(fa) the Small Industries Development Bank of India established under Section 3 of the Small Industries Development Bank of India Act, 1989;]

30[(ff) the National Housing Bank;]

(g) any other financial institution 6[other than a banking company] being an establishment in public sector, which the Central Government may, by notification in the Official Gazette, specify, having regard to,-

(i) its capital structure;

(ii) its objectives and the nature of its activities;

(iii) the nature and extent of financial assistance or any concession given to it by the government; and

(iv) any other relevant factor;

(ix) employees employed by inland water transport establishments operating on routes passing through any other country.

33. Act to apply to certain pending disputes regarding payment of bonus

Omitted by the Payment of Bonus (Amendment) Act, 1976, w.e.f. 25th. September, 1975.

34. Effect of laws and agreements inconsistent with the Act

Subject to the provisions of section 31A, the provisions of this Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service.]

35. Saving

Nothing contained in this Act shall be deemed to affect the provisions of the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (46 of 1948), or of any scheme made thereunder.

36. Power of exemption

If the appropriate government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act.

Comment: Bonus is treated as deferred wage. When the Parliament in its wisdom has enacted such a beneficial piece of social legislation which already guarantees minimum statutory bonus to employees governed by it, if the ir employers are to be allowed to earn exemption from the sweep of such a beneficial legislation which would ipso facto adversely affect entire class of their employees, the conditions for exercise of such power of exemption have to be strictly and objectively fulfilled by the repository of such a drastic power. A statutory right already accrues to employees under the Act. If the establishment employing such workmen or employees is desirous of depriving the statutory right of minimum bonus to its employees it may move the appropriate Government for exemption under Section 36 of the Act. State of T.N., Appellant v. K. Sabanayagam, AIR 1998 SUPREME COURT 344

37. Power to remove difficulties

Omitted by the Payment of Bonus (Amendment) Act, 1976, w.e.f. 25th. September, 1975.

38. Power to make rules

(1) The Central Government may make rules for the purpose of carrying into effect the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for,-

(a) the authority for granting permission under the proviso to sub-clause (iii) of clause (1) of section 2;

(b) the preparation of registers, records and other documents and the form and manner in which such registers, records and documents may be maintained under section 26;

(c) the powers which may be exercised by an Inspector under clause (e) of sub-section (2) of section 27;

(d) any other matter which is to be, or may be, prescribed.

(3) Every rule made under this section shall be laid as soon as may be after it is made, before each House of Parliament, while it is in session for a total period of thirty days, which may be comprised in one session 32[or in two or more successive sessions], and if before the expiry of the session 33[immediately following the session or the successive sessions aforesaid] both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

39. Application of certain laws not barred

Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947 (14 of 1947), or any corresponding law relating to investigation and settlement of industrial disputes in force in a State.

40. Repeal and saving

(1) The Payment of Bonus Ordinance, 1965 (3 of 1965), is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the said ordinance shall be deemed to have been done or taken under this Act as if this Act had commenced on the 29th May, 1965.

The Payment of Bonus Act, 1965 -Labour Laws – UGC NET Paper 2 Code:55

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