The Hindu Business Line : HC dismisses writ on bonus ceiling

THE Madras High Court has expressed its ``hopes'' that the Central Government might revise the eligibility limit for receiving bonus under the Payment of Bonus Act in view of the increase in salary/wages to workers.

Mr Justice P. Sathasivam, while disposing of a writ petition challenging Section 2(13) of the Act, said that the scheme of payment of bonus was on the basis of profit or productivity.

The Central Government might from time-to-time revise the eligibility limit for entitlement to bonus taking into account the economic situation prevailing in the country, capacity to pay, etc.

Inasmuch as the salary/wage ceiling for bonus entitlement was increased to Rs 3,500 per month in 1995, ``this court hopes that the Government may revise the eligibility limit in view of the increased salary/wage.

The petitioner, UCO Bank Employees Association, Tamil Nadu, sought to declare the ceiling on wages of employees with regard to entitlement for bonus under Section 2(13) of the Payment of Bonus Act as illegal and unconstitutional, and consequently, direct the respondents I and 2 (Secretary, Ministry of Labour, Government of India, and Secretary, Ministry of Finance) not to impose the salary ceiling on the wages of employees coming under classes III and IV with regard to entitlement for bonus.

The petitioner prayed for a direction to respondents 2 and 3 (Chairman and Managing Director, UCO Bank) to pay arrears of bonus for the period from 1986 to 1993. The writ petition was filed in 1995.

As per Section 2(13), employees were awarded to a minimum bonus of Rs 1,600 in 1965 (at the rate of 8.33 per cent of the total salary) and a maximum of 20 per cent. In 1985, the Central Government amended this section and enhanced the bonus quantum to Rs 2,500. After the filing of the writ petition, the ceiling was increased to Rs 3,500 in April, 1995.

The judge said that Parliament had the power to legislate on the question of payment of bonus.

The Parliament having legislated that bonus to employees of the public sector banks shall be payable only in accordance with the Payment of Bonus Act, it was no longer open to employees to claim bonus on the basis of custom, de hors, etc.

In the light of the fact that Parliament was well aware of the grievance of the employees and, hence, it increased the ceiling limit then and there, ``I am of the view that while holding that the impugned legislation is valid, no direction is required to be given by this Court. I hold that Section 2(13) of the Payment of Bonus Act defining an employee is constitutional and the same is valid in law'', the judge said.

The writ petition was dismissed.

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