Bonus Act Amendment 2015

After giving due consideration to the demands of trade unions with regards to increase the bonuses being given to workers under the Payment of Bonus Act, 1965 (“Principal Act”), the Government of India introduced the Payment of Bonus (Amendment) Bill, 2015 (“Amendment Bill”), in the Lok Sabha on 7 December 2015 and the same was passed on 22 December 2015. Further, the Amendment Bill was tabled and passed in the Rajya Sabha on 23 December 2015 and received the assent of the President of India on 31 December 2015 and became the Payment of Bonus (Amendment) Act, 2015 (“Amendment Act”).

Principle changes, as per the Amendment Act:

a. Raised the bar of wage threshold: To cover a bigger pool of workers, the wage threshold has been revised from INR 10,000 to INR 21,000 per month for determining eligibility of workers.

b. Increased the wage ceiling: The ceiling for calculation of bonus was revised from INR 3500 to INR 7000 per month "or the minimum wage for the scheduled employment, as fixed by the appropriate Government" (whichever is higher).

c. Retrospective effect: The Amendment Act has been brought in to take retrospective effect, wherefrom 1 April 2014.

Without going into deeper details of the first two revisions, for which a lot of my colleagues have already written, I would focus on the third and more complex issue of retrospective effect of the Amendment Act.

High Court’s view: The retrospective applicability of the Amendment Act had been challenged in the Hon'ble High Court of Kerala through the writ petition The United Planters' Association of Southern India and Others v the Union of India and Others, [W.P. (c) 3025/2016(C)] seeking, inter-alia, a stay on the retrospective applicability of the Amendment Act. The Hon'ble High Court has, by its interim order dated 27 January 2016 stayed the applicability of the Amendment Act to the extent it gives retrospective effect from 1 April 2014 and further specified that the Amendment Act should be implemented from 2015-16, pending disposal of the writ petition.

Soon thereafter, the Hon'ble High Court of Karnataka vide order dated 02 February 2016 in the matter of Karnataka Employees Association vs. Union of India [W.P. No. 5272/2016 (L-MW)] has also granted stay on the retrospective applicability of the Amendment Act and has further clarified that the amendment will take effect only from the financial year 2015-16.

The same was again concurred by the Hon'ble High Court of Allahabad vide order dated 12 February 2016 in the matter of Benara Udyog Ltd. vs. Union of India[W.P. 6098/2016]. There are similar writ petitions being filled or pending in other High Courts as well.

Now the bigger question is, whether the interim order issued by the Hon'ble High Court of Kerala/Karnataka/Allahabad applies across India or do establishments/companies need to file separate writ petitions in their respective states for relief?

Conclusion: After reading through the above cited court orders along with the judgment of the Hon'ble Supreme Court of India in the matter of Kusum Ingots & Alloys Ltd. v. Union of India, (2004) 6 SCC 254, keeping in view the provisions of clause (2) of Article 226 of the Constitution of India, which reads as:

"(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories."

I opine that an order passed on a writ petition questioning the constitutionality of a parliamentary Act, whether interim or final, will have effect throughout the territory of India, subject of course to the applicability of the Act.