query

There is a public providend fund instead of employees providend fund. Every post office savings banks is having such funds.

Dear Jayanta,

Do you mean to say that instead of appointing a person as a direct employee, he is appointed as a retainer or a consultant.?

In these cases, there is no liability upon the employer to provide Provident Fund Contribution. But you can always opt for Postal Schemes or Public Provident Fund Schemes or else opt for pension plans with any Insurance Companies.

Hi,

The Principal empoyer is a contracting comany and declared 20% Bonus to its employees.  Also, this Principal comapany takes about 500 Labourers through outsourced agencies and as per the terms of contract entered with the outsoiurced agency, that the principal empoyer shall pay only 8.33% of Bonus.

Kindly some one clarify whether this attracts any Bonus act violation since the principal company is paying 20% Bonus to its on roll employees and 8.33% to outsourced employees.for the same financial year.

Regards

Basavaraj

Dear Mr. Basavarajappa,

As per the Payment of Bonus Act, the Employer can declare any amount of Bonus based upon its profits (allocable surplus), subject to the Maximum of 20% and minimum of 8.33%.

But in case of Contractors, there is a Agreement which governs the terms and conditions of the contract for service which the contractor has agreed to provide. Hence it becomes a Civil Contract. The Prinicpal employer is not the employer of the Contract Labourer's and hence he is excluded from liability of payment of Bonus to the Contract Labour.

For the Contract Labour, the Contract is their employer, and hence no liability is upon the Principal Employer to pay Bonus.

But i must warn you that the clause that Principal employer would pay the Bonus should not be included in the Contract, as it would mean that the Principal employer is just reimbursing the Bonus costs to the Contractor, and may land the Company in trouble if any of the Contractor employee seeks permanency with the Principal EMployer, on the grounds that the Contract is Sham and Bogus. 

Instead, pay service charges at such rate which covers all such statutory requirements, which should include, Minimum Wages, Bonus, Provident Fund Contribution, ESIC Contribution, LWF Contribution, etc. There should be no mentioned in the agreement, of any contribution which the Company is making.

Thanks and Regards,

Ashish

Dear Mr.Ashish,

Thanks for your inputs on my Bonus clarifications.

Regards

Basavarajappa.C