Bonus Non‑Payment – Remedies Under the Code on Wages, 2019

 Resolving Non‑Payment of Bonus – Remedies Under the Code on Wages, 2019

Bonus payments are one of the most common disputes between employers and employees. The Code on Wages, 2019 consolidates provisions of the earlier Payment of Bonus Act, 1965, ensuring statutory bonus rights continue with updated compliance mechanisms.

Legal Framework Under the Code on Wages

• Applicability: Establishments with 20 or more employees.

• Eligibility: Employees earning up to ₹21,000 per month.

• Quantum of Bonus: Minimum 8.33% of wages, maximum 20% of wages, depending on allocable surplus.

• Timeline: Bonus must be paid within 8 months of the close of the accounting year.

• Records: Employers must maintain audited accounts to calculate allocable surplus.

Step‑by‑Step Solution for Employees [FREE]

1. Check Eligibility: Confirm your salary and establishment size meet Code criteria.

2. Request Clarification: Submit a written query to HR citing Sections 26–29 of the Code (bonus provisions).

3. File Grievance: Approach the labour inspector or commissioner if bonus is not paid within the statutory period.

4. Legal Remedy: Employees can file claims before the labour court under the Code’s grievance redressal mechanism.

5. Union Support: Collective disputes through unions often lead to faster resolution.

Compliance Checklist for Employers [FREE]

• Calculate allocable surplus correctly and maintain audited records.

• Pay minimum bonus even if the company makes losses (subject to statutory limits).

• Distribute bonus within 8 months of the accounting year.

• Avoid discriminatory practices; bonus must be paid to all eligible employees.

Recent Updates (2025–2026)

• Labour departments in Maharashtra and Tamil Nadu have increased inspections for bonus compliance under the Code.

• Courts have ruled that financial distress is not a valid excuse for denying minimum bonus.

• Digital payroll systems are being integrated with compliance checks to prevent defaults.

Conclusion Bonus payments are statutory entitlements under the Code on Wages, 2019. Employees who assert their rights through grievance mechanisms can secure their dues. Employers who comply not only avoid penalties but also build goodwill and trust among their workforce.

Disclaimer : The information provided for general educational purposes only. It does not constitute legal advice and should not be relied upon as such. Readers should consult qualified professionals for specific compliance or legal matters.