Under the Payment of Bonus Act, 1965, can contract workers and regular employees performing the same job receive different bonus percentages?

​Based on the Payment of Bonus Act, 1965, contract workers and regular employees doing the same job may receive different bonus percentages due to the following reasons:

Employment Relationship:

• Contract workers are employees of the contractor, while regular employees are directly employed by the principal employer.
• As per Section 8, the responsibility to pay the bonus lies with the respective employer. Thus, contract workers receive a bonus from their contractor, and regular employees receive a bonus from the principal employer.

Bonus Calculation Factors:

• The bonus is determined based on the allocable surplus of the employer (Section 11).
• The financial position of the contractor and the principal employer may be different, leading to variations in the percentage of bonus paid.

Legal Validity of Different Bonus Percentages:

• The Act mandates a minimum bonus of 8.33% (Section 10) and allows a maximum bonus of 20% based on the allocable surplus.
• Since the financial status of a contractor and the principal employer may vary, the percentage of bonus paid to contract workers and regular employees can differ legally.

Conclusion:
Even if contract workers and regular employees perform the same job, their bonus percentage can differ because the payment of bonus depends on their respective employer's financial status rather than job role or work similarity. Hence, it is legally valid for contract workers and regular employees to receive different bonus percentages. ​

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Shekar Ganagaluru's Books

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K. VITTALA RAO's HR Books