Tuesday, July 01, 2008

Bonus Act_Practical Promblems_29

We are a software company we have suspended an employee for committing theft and are paying subsistence allowance. He has claimed bonus for the year 2004 during which he was under suspension. Is he entitled to the bonus.

Section 2(21) of the Bonus Act defines salary or wage for the purpose of computing bonus. It means any remuneration, capable of being a expressed in terms of money, if the terms of employment, express or implied were fulfilled. But subsistence allowance is payable to an employee who is suspended pending enquiry/investigation under standing orders or rules or regulations. During suspension, the contract of employment remains suspended, not requiring the employee not to do any work and the employer not to pay. However, in order to mitigate the financial hardship to the suspended employee and his family some amount. that is stipulated under a statute or standing order is paid as subsistence allowance. Thus the subsistence allowance is not paid for the work done by the employee and hence cannot partake the character of remuneration within the meaning of salary or wage and therefore cannot be taken into account for computing bonus. Please refer to Motor Industries Company Ltd, v. Popat Muralidhar Patel & Ors., 1997 I CLR 169 (Bom.HC)

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