A PROPOSAL ON BONUS

Ever since the Bonus Act has come into being, ostensibly to put an end to bonus disputes, the number of bonus disputes has multiplied geometrically.  The chief reason for the disputes on bonus has been the inherent suspicion in the minds of the workmen when-ever

               

                (1)   a management declares 8 1/3% as per the Bonus Act, and

               

                (2)   whenever the management declares 20% as per the Bonus Act.

In the first instance, the misgivings on the part of the workmen relates to the feeling that the management has doctored the figures, to be able to pay only the minimum stipulated under the Act.  In the second instance, i.e. payment at the maximum rate of 20 % the feeling is that the company is certainly able to pay more but is taking cover under the provisions of the Act.

This is not to say the there is no dispute or less dispute when the bonus rate declared lies between the minimum and maximum.  The point being made is that any bonus rate  -  minimum, maximum or in between, is inherently suspected as being unfair if it has been worked out as per the Bonus Act.

Management’s grouse against both the minimum and maximum provisions are -

                (a)           that the minimum is enforced even in case of loss-making compaines, which

                                (I)  does not make economic sense, and

               

                                (ii)  is a heavy burden on such companies which to a certain extent influences the                                                     subsequent year’s working result adversely.

                (b)           In case of the maximum provision, their grouse is that the workmen never accept

                                that limit and always press for more.

On the part of the workmen, the single most important reason for their distrust of the Bonus Act is the suspicion which has been built up and strengthened over the years, that its provisions are too complicated and allow the management to fudge figures and thus pay them a low rate of bonus.  On the other hand, in case of loss-making companies, the workmen themselves take shelter of the Act to demand their pound of flesh,  viz. the minimum bonus.  Similarly, while management complain about the provision for payment of minimum bonus even for a loss making unit, they also take recurs to the Act whenever they find that they are in a position to pay more bonus and therefore would like to restrict their payment only to the maximum of 20% stipulated under the Act.

What it boils down to is that there is a great degree of mututal suspicion and distrust between employees and the employers, chiefly on the evaluation of the year’s profit performance and its manipulation under the provisions of the Bonus Act to arrive at the allocable surplus which, in turn, determines the rate at which Bonus can be paid.  There are many instances of a Company making very handsome profits but owing to carry-forward losses and other deductions allowed under the Bonus Act, it is liable to pay only the minimum bonus.  No doubt, some set-off and set-on provisions are also provided but they do not seem to satisfy the workmen.  Whenever the management of a company works out a figure as per the Bonus Act which is either low or lower than what the workmen have been expecting or have been promised by their Union leaders, the reaction of the workmen in usually to reject the working as bogus and agitate for a much higher rate of payment.  The dispute, therefore, primarily centers around the proper evaluation of profit.

There has been an oft expressed viewpoint that bonus must be linked to productivity i.e. a company which performs better would be in a capacity to pay more