The Narendra Modi government's effort to project a pro-labour image by doubling the wage ceiling to Rs 7,000 per month for calculating bonus payable to workers has backfired. India Inc wants the government to reconsider the decision to implement the amendment with retrospective effect, saying it will lead to accounting implications.
The decision was taken by the NDA government in October 2015 and was notified on 1 January, 2016.
The amended to the Payment of Bonus Act Bill also provided for raising the salary eligibility limit for payment of bonus from Rs 10,000 per month to Rs 21,000.
The amended provisions were deemed to have come into force from 1 April, 2014, which is the crux of the issue for employers.
The All India Organisation of Employers (AIOE) had raised the issue in its letter to Union Minister of State for Labour and Employment Bandaru Dattatreya on 21 January, saying the retrospective implementation was never discussed during the tripartite talks between the government, trade unions and employers.
"Companies have closed their account books for the year 2014-2015 on March 31, 2015, setting apart the amount of bonus out of the allocable surplus as per the practice. The amount so set apart is adequate and proportionate to the commitment/agreement with the unions, according to which bonus has been distributed and taxes paid. Now, re-opening the account books and enhancing the amount of bonus would upset the entire exercise, disturbing other financial commitments," said AIOE president Sanjay Bhartia.
The letter added that the amendment would trigger a series of disputes between employees and employers having operations in more than one state, and requested the government to make appropriate changes.
"It is therefore, requested to enforce the amendment with prospective effort, ie, from the financial year 2015-16," said AIOE.