ABC Ltd hired Mr. X, a contractor. Mr. X also has many workers/employees working under him. Under Bonus Act, is ABC Ltd. liable to pay bonus to employees of Mr. X, the contractor? Answer with suitable reasons.
16 Replies
Sagar Zankhariya
(Audit Assist.)
(278 Points)
Replied 26 October 2010
No, ABC Ltd. not liable to give a bonus to employee of contractor
Only Contractor is liable
Bcz ABC limited hired a contractor not his employee.
VUELVE
(CA- Student)
(351 Points)
Replied 26 October 2010
ABC Ltd has given contract to Mr. X, and Mr. X is the person who gives employment in ABC Ltd as per the Terms & Conditions of the Contract. Mr. X only will pay Salaries, PF, ESI and also Bonus. ABC Ltd is nowhere concerned about payment of Bonus to employees of Mr. X.
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8311 Points)
Replied 26 October 2010
| Originally posted by : CA PCC | ||
 |
ABC Ltd has given contract to Mr. X, and Mr. X is the person who gives employment in ABC Ltd as per the Terms & Conditions of the Contract. Mr. X only will pay Salaries, PF, ESI and also Bonus. ABC Ltd is nowhere concerned about payment of Bonus to employees of Mr. X. |
 |
PANKAJ SHARMA
(ACCOUNTS MANAGER)
(79 Points)
Replied 26 October 2010
ABC Ltd is not liable to pay bonus to the employees of Mr. X.
However, being the Principal Party, it is the duty of ABC Ltd to ensure that the payments of PF, ESIC of the employees of Mr. X is being paid to the Government.
ca sanchita saumya
(Chartered accountant)
(39 Points)
Replied 26 October 2010
| Originally posted by : Udit Varshney | ||
|
according to Bonus act, bonus is payably to those employes whose salary is less than 10000. here Mr. A considered as contractor who provides employment for a durable period. he is not a regular employer. ABC is not liable to pay bonus to him and his employee. |
|
Udit Varshney
(Student)
(39 Points)
Replied 26 October 2010
i also was thinkin da same solution.
but while i waas goin through PADHUKA.. i saw a list of "employees NOT entitled to bonus". in a sub point, it had "employee employed through contractors on BUILDING OPERATIONs are specifically excluded u/s 32(vi)
so i interpreted dat if MR.X (in my earlier example) had been a buildin contractor then only ABC ltd need not to pay bonus to d employees of Mr.X
is my conclusion correct?
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 27 October 2010
Even if it is Building Contractor, he will be liable to pay Bonus to its Employees. And in your example Mr. X is liable to pay Bonus. The rule which was u/s 32(vi) is now amended that even Building Contractors must pay it. Please visit the following link :
Source : - https://pib.nic.in/release/release.asp?relid=31572
PANKAJ O JOSHI
(MANAGER - ACCOUNTS & FINANCE)
(22 Points)
Replied 27 October 2010
Ahmed is right. But the answer to query is that ABC Ltd is not liable to pay bonus to the employees of Mr. X as the Employer & Employee relationship is not there. Mr. X will only be liable to pay bonus to his employees.
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 27 October 2010
Mr Udit Varshney,
Your interpretation is absolutely correct. After the bonus amendement act in 2007, the provisions would be applicable to employees employed through a contractor also. If not, then specific amendment in 32 will not serve the purpose.
Welcome comments. Thanks
CA Sandeep Kumar
(Audit Assistant)
(804 Points)
Replied 28 October 2010
Hi, i asked the same doubt to one of experts in the field. His reply is as under:
In my view they are eligible to get bonus - but liability is of contractor and not of Principal Employer
No liability for bonus to employees of contractor - Principal employer is not liable to pay bonus to employees of contractor, as the liability of Principal Employer under Contract Labour Act is of ‘wages’, while bonus is not ‘wages’ – Commico Burani Zinc v. Pappacham 1989 LLR 123 (Ker HC).
Whizkid
(student)
(640 Points)
Replied 29 October 2010
@ Fiaz - Building contract has been removed from the scope of section
Rai Juris Legum
(Managing Director)
(23 Points)
Replied 30 October 2010
Mr. Joshi has made the point more clear
Udit Varshney
(Student)
(39 Points)
Replied 02 November 2010
@ sandeep:
well..m bit confused bro. if my interpretation is correct, accordingly ABC ltd is liable.
but every1 here is sayin jus da opposite. though i was thinkn da same. but still if i go by d book, den?
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