• Home
  • /
  • The Payment of Bonus Act 1965

The Payment of Bonus Act 1965

The Payment Of Bonus Act 1965


  • The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 1917. In certain cases of industrial disputes demand for payment of bonus was also included. In 1950, the Full Bench of the Labour Appellate evolved a formula for determination of bonus. A plea was made to raise that formula in 1959. At the second and third meetings of the Eighteenth Session of Standing Labour Committee (G. O.I.) held in New Delhi in March/April 1960, it was agreed that a Commission be appointed to go into the question of bonus and evolve suitable norms. To implement these recommendations the Payment of Bonus Ordinance, 1965 was promulgated on 29th May, 1965. To replace the said Ordinance the Payment of Bonus Bill was introduced in the Parliament.


  • A Tripartite Commission was set by the Government of India by their resolution No.WB-20(9)/61, dated 6th December, 1961 to consider in a comprehensive manner, the question of payment of bonus based on profits to employees employed in establishments and to make recommendations to the Government.

ACT 21 OF 1965

  • The Payment of Bonus Bill having been passed by both the Houses of Parliament received the assent of the President on 25th September, 1965. It came on the Statute Book as THE PAYMENT OFBONUS ACT, 1965 (21 of 1965).


  1. The Insurance (Amendment) Act, 1968 (62 of 1968).
  2. The Payment of Bonus (Amendment) Act, 1969 (8 of 1969).
  3. The Central Labour Laws (Extension of Jammu And Kashmir) Act, 1970 (51 of 1970).
  4. The Payment of Bonus (Amendment) Act, 1972 (68 of 1972).
  5. The Payment of Bonus (Amendment) Act, 1973 (39 of 1973).
  6. The Payment of Bonus (Second Amendment) Act, 1973 (55 of 1973).
  7. The Payment of Bonus (Amendment) Act, 1974(42 of 1974).
  8. The Payment of Bonus (Amendment) Act, 1976(23 of 1976).
  9. The Payment of Bonus (Amendment) Act, 19 7 (43 of 1977) [as amended by the Payment of Bonus (Amendment) Act, 1978 (48of 1978) and the Payment of Bonus (Amendment) Act, 1980 (5 of 1980)].
  10. The Payment of Bonus (Second Amendment) Act, 1980 (66 of 1980).
  11. The National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981).
  12. The Payment of Bonus (Amendment) Act, 1985 (30 of 1985).
  13. The Payment of Bonus (Second Amendment) Act, 1985 (67of 1985).
  14. The National Housing Bank Act, 1987 (53 of 1987).
  15. The Small Industries Development Bank of India Act, 1989 (39 of 1989).
  16. The Payment of Bonus (Amendment) Act, 1995 (34 of 1995).

THE PAYMENT OF BONUS ACT, 1965, (21 of 1965)1

[25th September, 1965]

2[An Act to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith.]

BE it enacted by Parliament in the Sixteenth Year of the Republic of India as follows:

  1. Short title, extent and application
  2. Definition.In this Act, unless the context otherwise requires-accounting year” means
    • In relation to a corporation
    • In relation to a company
  3. Establishments to include departments, undertakings and branches
  4. Computation of gross profits
  5. Computation of available surplus
  6. Sums deductible from gross profits
  7. Calculation of direct tax payable by the employer
  8. Eligibility for bonus
  9. Disqualification for bonus
  10. Payment of minimum bonus
  11. Payment of maximum bonus
  12. Calculation of bonus with respect to certain employees
  13. Proportionate reduction in bonus in certain cases
  14. Computation of number of working days
  15. Set on and set off of allocable surplus
  16. Special provisions with respect to certain establishment
  17. Adjustment of customary or interim bonus against bonus payable under the Act
  18. Deduction  of  certain  amounts  from  bonus  payable  under  the  Act.
  19.  Time-limit for payment of bonus
  20. Application of Act to establishments in public sector in certain cases
  21. Recovery of bonus due from an employer
  22. Reference of disputes under the Act
  23. Presumption about accuracy of balance-sheet and profit and loss account of corporation and companies
  24. Audited accounts of banking companies not to be questioned
  25. Audit of accounts of employers, not being corporations or companies
  26. Maintenance of register, records, etc.
  27. Inspectors.
  28. Penalty
  29. Offences by companies
  30. Cognizance  of  offences
  31. Protection of action taken under the Act
  32. Special provision with respect to payment of bonus linked with production or productivity
  33. Act not to apply to certain classes of employees
  34. Act to apply to certain pending disputes regarding payment of bonus
  35. Effect of laws and agreements inconsistent with the Act
  36. Saving
  37. Power of exemption
  38.  Power to remove difficulties
  39. Power to make rules
  40. Application of certain law not barred
  41. Repeal and saving


Leave Your Comment Here