A petition has been filed in the Calcutta High Court challenging the amendments to the Payment of Bonus Act..The petition filed by East India Transport Agency (Petitioner) was mentioned on Monday before Justice Sambuddha Chakaraborty seeking an urgent hearing since the court is closing for summer vacation on Friday this week. The matter has been listed for hearing today..Advocates Rohit Das, Rudrajyoti Nath Ray and Kishwar Rahman from law firm Rohit Das & Associates Legal, Calcutta are representing the petitioner..The petition challenges the vires of Payment of Bonus (Amendment) Act, 2015 (Amending Act) which was published in the gazette on January 1, 2016 but came into force retrospectively from April 1, 2014..Subsequently, Carrier Transport Employees’ Union (Employees Union), purporting to be representing the employees of the Petitioner, gave a strike notice to the petitioner, on the basis of the retrospective operation of the Amending Act claiming the bonus due under the same for the period April 1, 2014 to March 31, 2015. Meanwhile, various other High Courts, including the Calcutta High Court stayed the retrospective operation of the Act..However, since the Employees Union refused to relent, the petitioner moved the Calcutta High Court..The Amending Act.The Amending Act has brought about the following changes..Eligibility Limit – By amending Section 2(13) of the Principal Act, the Amending Act has now widened the scope of employees eligible for payment of bonus from those drawing salary of INR 10,000 (Indian National Rupees Ten Thousand) per month to INR 21,000 (Indian National Rupees Twenty-One Thousand) per month.Calculation of Bonus – For the purposes of calculation of bonus under Section 12 the base salary or wage has been amended by enhancing the limit from INR 3,500 (Indian National Rupees Three Thousand Five Hundred) per month to INR 7000 (Indian National Rupees Seven Thousand) per month or the minimum wage notified for scheduled employment under The Minimum Wages Act, 1948 (“MW Act”), whichever is higher for consideration of bonus.Retrospective Effect – The Amending Act has been brought into force retrospectively, from April 1, 2014..The petition.The Petitioner has contended that the Amending Act is unconstitutional and arbitrary and its retrospective operation leads to absurd results that could not have been the intention of the framers of the law..It has submitted that the insertion of a reference to minimum wages under the Minimum Wages Act to calculate bonus payment has created challenges for companies..“The Appropriate Governments (i.e., State Governments) fix different minimum wages for various scheduled employments. Further, even within a particular schedule employment, different minimum wages are notified for different categories of employees. Thus, employers would have to carry out an assessment of the applicable wage rates for different categories of employees in order to calculate the statutory bonus payable. .The issue is further significant for the reason that employers have offices in multiple States and the minimum wages for the same scheduled employment also varies from one State to another. Several companies currently follow the practice of calculating the maximum statutory bonus (i.e., 20% of INR 3,500/-) and paying this to employees on a monthly basis through the year. However, since there is now a reference to minimum wages under the MW Act and since minimum wages are updated on a periodic basis (i.e., once or twice a year), there would be an increased variability in the bonus amount, and it would therefore be difficult for employers to predict the maximum bonus payable under the Amending Act read with the Principal Act, especially for the lack of a provision defining just calculation.”.The Petitioner has submitted that the vague, incomplete, absurd, arbitrary provisions of the Amending Act does not have a rational, reasonable or proximate nexus with its intended objectives. It has also contended that the Amending Act is wholly arbitrary and unreasonable..“As a result of the retrospective operation of the Amending Act, the financial liability of the employer would have to be recomputed and would be enhanced in respect of a period where a deposit has already been made in compliance of the provisions of Section 19(b) even before the assent of the President to the Amending Act had been received on December 31, 2015. The allocable surplus would need to be re-assessed to account for the increased pool of covered employees and the bonus eligibility re-determined based on revised calculation ceilings and available surplus. .This would then have to redistributed among this lager pool of employees, which may result in various outcomes – (i) Companies could now be required to pay an additional bonus to employees who have already been paid, if the bonus amount that was paid earlier is lower than the bonus payable after the Amendments; or ii) if the bonus already paid was higher that bonus payable after the Amendment, there may even be a reduction of bonus entitlement for some individuals (either in terms of the amount payable or in the context of percentage of bonus received), to accommodate bonus payments to the newly covered staff using the allocable surplus. Thus, a retrospective operation of the Amending Act is violative of Article 14 for the reason that it casts an unforeseen liability on the employer and is wholly unreasonable and arbitrary.”.The Petitioner has also questioned the legality of the strike by the Employees Union alleging that the same is illegal and only counter productive for the employees..“Right to Strike or Agitate is not a Fundamental Right and is only a Legal Right which may be exercised in the event of “urgent and pressing grievances for which no means of resolution are available. In view of the stay orders of four Hon’ble High Courts including this Hon’ble High Court, arresting the retrospective operation of the Amending Act, it cannot be said that the Respondent No. 2 had an urgent or pressing grievance to initiate an ‘Agitational Programme’ or threaten a strike. The same is illegal and indeed counter productive, onerous for employees who may be denied wages for the period of strike.”.Prayers.The Petitioner has prayed for declaring the Amending Act as unconstitutional. It has also sought a direction to be issued to the Employees Union to forbear from resorting to any strike..As interim relief, the Petitioner has sought a stay on the retrospective operation of the Amending Act and prayed for restraining the respondents from acting in furtherance of the Act..The case will be heard today after 2 pm..Update: The Court has stayed the retrospective operation of the Act.
A petition has been filed in the Calcutta High Court challenging the amendments to the Payment of Bonus Act..The petition filed by East India Transport Agency (Petitioner) was mentioned on Monday before Justice Sambuddha Chakaraborty seeking an urgent hearing since the court is closing for summer vacation on Friday this week. The matter has been listed for hearing today..Advocates Rohit Das, Rudrajyoti Nath Ray and Kishwar Rahman from law firm Rohit Das & Associates Legal, Calcutta are representing the petitioner..The petition challenges the vires of Payment of Bonus (Amendment) Act, 2015 (Amending Act) which was published in the gazette on January 1, 2016 but came into force retrospectively from April 1, 2014..Subsequently, Carrier Transport Employees’ Union (Employees Union), purporting to be representing the employees of the Petitioner, gave a strike notice to the petitioner, on the basis of the retrospective operation of the Amending Act claiming the bonus due under the same for the period April 1, 2014 to March 31, 2015. Meanwhile, various other High Courts, including the Calcutta High Court stayed the retrospective operation of the Act..However, since the Employees Union refused to relent, the petitioner moved the Calcutta High Court..The Amending Act.The Amending Act has brought about the following changes..Eligibility Limit – By amending Section 2(13) of the Principal Act, the Amending Act has now widened the scope of employees eligible for payment of bonus from those drawing salary of INR 10,000 (Indian National Rupees Ten Thousand) per month to INR 21,000 (Indian National Rupees Twenty-One Thousand) per month.Calculation of Bonus – For the purposes of calculation of bonus under Section 12 the base salary or wage has been amended by enhancing the limit from INR 3,500 (Indian National Rupees Three Thousand Five Hundred) per month to INR 7000 (Indian National Rupees Seven Thousand) per month or the minimum wage notified for scheduled employment under The Minimum Wages Act, 1948 (“MW Act”), whichever is higher for consideration of bonus.Retrospective Effect – The Amending Act has been brought into force retrospectively, from April 1, 2014..The petition.The Petitioner has contended that the Amending Act is unconstitutional and arbitrary and its retrospective operation leads to absurd results that could not have been the intention of the framers of the law..It has submitted that the insertion of a reference to minimum wages under the Minimum Wages Act to calculate bonus payment has created challenges for companies..“The Appropriate Governments (i.e., State Governments) fix different minimum wages for various scheduled employments. Further, even within a particular schedule employment, different minimum wages are notified for different categories of employees. Thus, employers would have to carry out an assessment of the applicable wage rates for different categories of employees in order to calculate the statutory bonus payable. .The issue is further significant for the reason that employers have offices in multiple States and the minimum wages for the same scheduled employment also varies from one State to another. Several companies currently follow the practice of calculating the maximum statutory bonus (i.e., 20% of INR 3,500/-) and paying this to employees on a monthly basis through the year. However, since there is now a reference to minimum wages under the MW Act and since minimum wages are updated on a periodic basis (i.e., once or twice a year), there would be an increased variability in the bonus amount, and it would therefore be difficult for employers to predict the maximum bonus payable under the Amending Act read with the Principal Act, especially for the lack of a provision defining just calculation.”.The Petitioner has submitted that the vague, incomplete, absurd, arbitrary provisions of the Amending Act does not have a rational, reasonable or proximate nexus with its intended objectives. It has also contended that the Amending Act is wholly arbitrary and unreasonable..“As a result of the retrospective operation of the Amending Act, the financial liability of the employer would have to be recomputed and would be enhanced in respect of a period where a deposit has already been made in compliance of the provisions of Section 19(b) even before the assent of the President to the Amending Act had been received on December 31, 2015. The allocable surplus would need to be re-assessed to account for the increased pool of covered employees and the bonus eligibility re-determined based on revised calculation ceilings and available surplus. .This would then have to redistributed among this lager pool of employees, which may result in various outcomes – (i) Companies could now be required to pay an additional bonus to employees who have already been paid, if the bonus amount that was paid earlier is lower than the bonus payable after the Amendments; or ii) if the bonus already paid was higher that bonus payable after the Amendment, there may even be a reduction of bonus entitlement for some individuals (either in terms of the amount payable or in the context of percentage of bonus received), to accommodate bonus payments to the newly covered staff using the allocable surplus. Thus, a retrospective operation of the Amending Act is violative of Article 14 for the reason that it casts an unforeseen liability on the employer and is wholly unreasonable and arbitrary.”.The Petitioner has also questioned the legality of the strike by the Employees Union alleging that the same is illegal and only counter productive for the employees..“Right to Strike or Agitate is not a Fundamental Right and is only a Legal Right which may be exercised in the event of “urgent and pressing grievances for which no means of resolution are available. In view of the stay orders of four Hon’ble High Courts including this Hon’ble High Court, arresting the retrospective operation of the Amending Act, it cannot be said that the Respondent No. 2 had an urgent or pressing grievance to initiate an ‘Agitational Programme’ or threaten a strike. The same is illegal and indeed counter productive, onerous for employees who may be denied wages for the period of strike.”.Prayers.The Petitioner has prayed for declaring the Amending Act as unconstitutional. It has also sought a direction to be issued to the Employees Union to forbear from resorting to any strike..As interim relief, the Petitioner has sought a stay on the retrospective operation of the Amending Act and prayed for restraining the respondents from acting in furtherance of the Act..The case will be heard today after 2 pm..Update: The Court has stayed the retrospective operation of the Act.
