A Study on Payment of Bonus Act and PLB for Railway Employees

Impact of the Bonus Act Amendments – Details of revised Bonus and PLB calculations

Salient features of the Bonus amendments and the actual amount of Bonus and Production Linked Bonus (PLB) are shown below:

THE PAYMENT OF BONUS ACT, 1965 &

PLB TO RAILWAYMEN

BY: K.V.RAMESH, Sr.JGS/IRTSA

PAYMENT OF BONUS ACT, 1965 & AMENDMENTS THEREOF

Minimum bonus 8.33% of the salary/wage of an employee.

Maximum bonus including productivity linked bonus shall not exceed 20% of the salary/wage of an employee.

Previous amendment of 2007 was notified on 13 December 2007 and made effective from 1st April, 2006.

Minimum bonus of 8.33% of (Rs. 3500/- X 12= Rs. 42,000/) is approximately Rs. 3500/-.

20% of above referred Rs. 42,000/- is Rs. 8,400/-.

However, the limit is given as Rs. 8,300/-.

Details of amendments to the Payment of Bonus Act, 1965:

PRODUCTIVITY LINKED BONUS FOR RAILWAY EMPLOYEE

SALIENT FEATURES OF THE PLB SCHEME ARE AS UNDER: –

a) The output for a year is reckoned by the equated net tonne kilometres by adding together:-

i) Total goods revenue net tonne kilometres

ii) Non-suburban passenger kilometres converted by a factor of 0.076.

iii) Suburban passenger kilometres converted by a factor of 0.053.

b)  The input is  taken  as  the non-gazetted  staff  strength (excluding  RPF/RPSF  personnel),  increased  by  the incremental increase/decrease in capital (over average of last three years) during the year.

c) Highest PLB amount of 78 days’ wages was paid for the financial years 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15.

d) The wage calculation ceiling prescribed for payment of PLB to the eligible non-gazetted railway employees is  3500/- p.m. The maximum amount payable per eligible railway employee is Rs. 8975 for 78 days.

• Amount  paid  as  bonus  never  shown  meaningful increase over last 15 years.
• Only between 2006-07 and 2007-08 there was a visible increase in bonus amount.
• If  bonus  is  linked  with  inflation  at  the  rate  of average 12% per year from 2001-02, it should have become Rs.24000 now, even without considering any productivity improvement.
• Bill passed in Lok Sabha is a very late action taken by the Government.
• Railways should not try to put any rider on this very late action.

After enactment of the present bonus bill,wage calculation ceiling prescribed for payment of PLB to non-gazetted railway employees will be increased to 7000/- p.m. The maximum amount payable per eligible railway employee can also go upto Rs.21,000.

But,  Railway  Board  is  having  proposals  to  revise  the  calculation  formula  for  PLB which may reduce the expected benefit.
Source : IRTSA