PAYMENT OF BONUS (AMENDMENT) ACT 2015. - Stay Order from Karnataka High Court
HON’BLE HIGH COURT KARNATAKA STAYS OF RETROSPECTIVE EFFECT OF PAYMENT OF BONUS (AMENDMENT) ACT 2015.
Mr B C Prabhakar,President,The Karnataka Employers Association and another establishment have filed the Writ Petition before Hon’ble High Court of Karnataka in WP No.5272 & 5311/2016 challenging the portion of the Payment of Bonus (Amendment) Act 2015 (No. 6 of 2016) published in the Gazette of India Extraordinary Part II Section -1, dated 1.1.2016 in so far as the retrospective operation of the amendment from 1.4.2014 and also the amendment in so far as relates to words “or the Minimum Wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher” as inserted in the Section 12 of the Act.
The Writ Petition came up for preliminary hearing on 2.2.2016. After hearing the matter the Hon’ble Court has stayed the Amendment to the Payment of Bonus Act to the extent it gives the retrospective effect from 1.4.2014. The Hon’ble Court has further ordered that the amended provision shall be implemented effective from 2015-16 pending disposal of the Writ Petition.
The Writ Petition came up for preliminary hearing on 2.2.2016. After hearing the matter the Hon’ble Court has stayed the Amendment to the Payment of Bonus Act to the extent it gives the retrospective effect from 1.4.2014. The Hon’ble Court has further ordered that the amended provision shall be implemented effective from 2015-16 pending disposal of the Writ Petition.
Introduction
The Payment of Bonus (Amendment) Act, 2015 (Amendment Act) was introduced on 1 January
2016 bringing reforms in the scope and calculation methodology and
making Payment of Bonus Act, 1965 (Principal Act) applicable to a
larger section of employees. The Amendment Act was made
retrospectively applicable from 1 April 2014.
However, this retrospective applicability of the Amendment Act has been stayed by the Hon'ble High Court of Kerala by way of an interim order
The Amendment Act introduced several key changes, including the increase of the scope of the Principal Act to include employees drawing a salary of INR 21,000 per month from the extant INR 10,000 per month, and specifying that in the event an employee's salary or wage exceeds INR 7,000, for the purposes of calculating bonus, the salary would be considered to be INR 7,000. The Principal Act originally specified that that in the event an employee's salary or wage exceeds INR 3,500, for the purposes of calculating bonus, the salary would be considered to be INR 3,500. Most importantly, the provisions of the Amendment Act were made retrospectively applicable, with the effective date of applicability being 1 April 2014.
We had, in an earlier publication, highlighted that the Amendment Act is a step towards ensuring that the labour laws keep abreast with the economic reforms taking place in India. However, the implementation of the Amendment Act retrospectively caused confusion among employers; major criticism that arose was that employers did not have sufficient time to prepare and adapt to the amendments – and further, that the Amendment Act causes undue financial stress on the employers.
However, this retrospective applicability of the Amendment Act has been stayed by the Hon'ble High Court of Kerala by way of an interim order
The Amendment Act introduced several key changes, including the increase of the scope of the Principal Act to include employees drawing a salary of INR 21,000 per month from the extant INR 10,000 per month, and specifying that in the event an employee's salary or wage exceeds INR 7,000, for the purposes of calculating bonus, the salary would be considered to be INR 7,000. The Principal Act originally specified that that in the event an employee's salary or wage exceeds INR 3,500, for the purposes of calculating bonus, the salary would be considered to be INR 3,500. Most importantly, the provisions of the Amendment Act were made retrospectively applicable, with the effective date of applicability being 1 April 2014.
We had, in an earlier publication, highlighted that the Amendment Act is a step towards ensuring that the labour laws keep abreast with the economic reforms taking place in India. However, the implementation of the Amendment Act retrospectively caused confusion among employers; major criticism that arose was that employers did not have sufficient time to prepare and adapt to the amendments – and further, that the Amendment Act causes undue financial stress on the employers.
It remains to be seen how the judiciary balances the pro-labour
reforms aimed at benefiting the employees with the interests of the
employers in times to come.
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