Kerala HC issues interim stay on retro amendment of Bonus Act

Plantation sector in Kerala expects tough time with the amendment

In what comes as a partial relief to planters in Kerala, the state's High Court has issued an interim order staying the retrospective implementation of the recently passed Payment of Bonus (Amendment) Act, 2015. However, the plantation industry in the state, which is also facing challenges in the sluggish commodity market, is expecting a tougher time ahead with the higher bonus to be disbursed from 2016-17 onwards, said industry sources.

The order is in a petition filed by the United Planters' Association of Southern India (UPASI).

The court ordered that pending litigation, the Act could be implemented from 2015-16.

Parliament recently passed the Act, under which the salary limit for workers eligible for bonus was enhanced from Rs 10,000 a month to Rs 21,000, effectively bringing a larger number of beneficiaries under the Act. The ceiling on bonus, which was Rs 3,500 for an employee, was doubled to Rs 7,000 or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher.

 

Earlier, even if the calculation of bonus was higher than Rs 3,500, as per the ceiling, the workers were eligible for no more than Rs 3,500 as bonus, irrespective of what the total calculation of bonus was. With the amendment, the ceiling was doubled to Rs 7,000, which has become a burden to the planters, according to industry sources.

"The amendment will have a serious impact on us, considering almost 60 per cent of our cost of production is in labour, unlike many other sectors," said N Dharmaraj, president of UPASI, an organisation of planters with around 1,000 members from South India.

In an interim order, Justice V Chitambaresh, Kerala High Court, stated "...amendment to the extent it gives retrospective effect from April 1, 2014 is hereby stayed....amentment, in other words shall be implemented from 2015-16 pending disposal of the writ petition".

The retrospective aspect was very challenging to the industry considering that the financial year has been closed and the bonus has already been paid, said C Vinayaraghavan, chairman, Association of Planters of Kerala (APK)

"The Act also brings in the minimum wages into it, which was not there earlier. Considering that the plantation industry in a State like Kerala, where the minimum wages are higher, this would have a serious impact," he added pointing to the provision that Calculation Ceiling under section 12 was enhanced from Rs 3500 to Rs 7000 "or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher".

According to the association, the size of total plantation industry in Kerala is around Rs 9,387 crore. The State accounts to 82 per cent of Rubber, six per cent of Tea and 87 per cent of Cardamon production in the country.

According to sources, similar petitions are being filed in some other South Indian states also.

A press release from the Centre on January 8, announcing the notification of the Bill, said that the Government has been receiving representations from trade unions for removal of all ceilings under the Payment of Bonus Act, 1965. It is also one of the demands made by them during the country-wide general strike held in February, 2013 and September, 2015. As the last revision in these two ceilings were made in the year 2007 and was made effective from the 1st April, 2006, it was decided by the Government to make appropriate amendments to the Payment of Bonus Act, 1965.

These changes in the Payment of Bonus Act, 1965 will benefit thousands of work force, it added.