India Inc wants retro clause of Bonus Act revoked

The word retrospective is condemned not just by MNCs like Vodafone, Shell and others, it's equally bad for the Indian industry which is opposing the Payment of Bonus (Amendment) Act, 2015 that has been enacted retrospectively.

On Wednesday, industry bodies Federation of Indian Chambers of Commerce and Industries (Ficci), Confederation of Indian Industry (CII), Indian Staffing Federation and others met the principal labour and employment advisor and director general (employment) P P Mitra and labour commissioners, asking them to revoke the retrospective nature of the amended law, which was passed in the winter session of the parliament and notified in January.

Suchita Dutta, executive director of the Indian Staffing Federation, who was present at the meeting, said all the representatives from different sectors spoke in one voice on the issue.

"Sometimes, you have contradictions, (but) today there was no contradiction. Retrospectively (implementing the law) is going to be difficult not only from the perspective of calculating it, but also from the perspective of identifying people and then tracing them back and giving them money (bonus). It's going to be a huge and futile exercise, which will most likely create an industry uproar," she told dna.

Under the amended Act, the ceiling for salary or wages eligible for bonus has been raised to Rs 21,000 per month from the earlier Rs 10,000 per month for scheduled employees and to Rs 7,000 per month from the earlier Rs 3,500 per month for unscheduled workers.

This will increase the number of workforce to whom companies will have to be pay bonus, which is described as a statutory right to employees of an establishment to share the profits of his/her employer in the Act.

While India Inc is fine with raising of the cut-off wage limit for the pay-out of bonus, it is protesting against it being done retrospectively. The notification issued by the government last month states it would be effective from April, 2014.

"The only problem is that it has come retrospectively, backdated by two years. The problem is not the Payment of Bonus Act amendment, we welcome it," said Dutta.

She said the industry would be okay even if the Act came into effect from April 2015 as then the "books" were still open for that period. She said financial books for April, 2014 have already been closed.

The industry bodies also asked for exited employees to not be brought under the ambit of the amended Act. Another issue raised in the discussion with labour ministry officials was the linking of the bonus to minimum wages, which would result in wide "differentiation and dissatisfaction" among employees working in different states and companies.

"One company's way of calculating minimum wages is very different from another. Then, a person working in two different states will be getting two different kind of bonuses. The moment it is linked to minimum wages, there'll be lot of differentiation and dissatisfaction," said Dutta.

In the proposal submitted to the government, the industry lobby bodies have recommended a bonus, which is slab-based or is a fixed amount as per the job category.

The representation to the government, notwithstanding, the industry is not very hopeful the retrospective clause of Act would be revoked through the legislative process as it would be long drawn.

An executive, who spoke on condition of anonymity, said, "Courts would be the answer". Interestingly, MNCs had also approached the courts to resolve the retrospective taxation issue.

"There is a possibility that court is the answer to this because going through the parliament is going to be a very long process now," said the executive, who did not want to be named.

There are already cases relating to the retrospective clause of the Bonus Act being pursued in Kerala and Karnataka courts. Some are likely to come up in Madhya Pradesh court too.

If it is done through the parliament, it will have to be cleared in both the houses – Lok Sabha and Rajya Sabha, which would take long.