Section 29: Disqualification for bonus

Overview

This section of the Code on Wages, 2019, deals with the circumstances under which an employee may not be eligible to receive a statutory bonus. It outlines specific misconduct that can lead to a loss of bonus entitlement, protecting employer interests while also setting clear boundaries.

Scope and Coverage

• This section applies to all employees covered under the Code on Wages, 2019, who are eligible for bonus based on the profitability and payment criteria outlined elsewhere in the Code.
• It applies to all establishments covered by the Code, regardless of sector (with some exceptions as defined by the Code itself regarding applicability based on number of employees).
• There are no specific thresholds for bonus amount that affect disqualification; the disqualification applies regardless of the bonus amount.

Key Obligations and Rights

• Employer Duty: Employers must clearly define what constitutes ‘fraud’, ‘riotous or violent behaviour’, and ‘theft’ in their standing orders or service rules to avoid ambiguity. They must also follow a fair process before disqualifying an employee.
• Employee Right: Employees have the right to a fair hearing and due process if an employer alleges misconduct that could lead to bonus disqualification. The employer must provide evidence supporting the allegations.
• Employee Right: Employees are protected from arbitrary disqualification. The grounds for disqualification are specifically listed in the law.

Compliance and Penalties

If an employer wrongly disqualifies an employee from bonus, it is considered a violation of the Code on Wages, 2019. This can lead to inspections by Labour Inspectors, who can issue notices to rectify the situation. Penalties can include fines and, in some cases, imprisonment for the employer or responsible officer, as specified in the Code. Employees can also approach Labour Courts for redressal.

Practical Examples

• Example 1: An accountant is found to have embezzled company funds (fraud). The employer, after a proper investigation and following due process, can disqualify the accountant from receiving the bonus for that year.
• Example 2: An employee gets into a heated argument with a supervisor that escalates into a minor scuffle (not riotous or violent behaviour as defined legally). Disqualifying the employee from the bonus in this case would likely be considered unfair and a violation of the Code, as the incident doesn't meet the legal definition of disqualifying behaviour.