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The Bombay High Court has passed an interim order staying the retrospective operation of the Payment of Bonus (Amendment) Act, 2015.
The Act raised the ceiling limit on monthly wages from ₹10,000 to ₹21,000 to make more employees eligible for bonus. Further, prior to the amendment, any employee eligible for bonus drawing more than ₹3,500 would be treated as having a salary of ₹3,500 for the purpose of calculation of bonus. This limit was increased to ₹7,500.
However, the bigger issue at stake is that while the amendment received the President’s assent on December 31, 2015, it was to come into force retrospectively beginning April 1, 2014. IT services major Tech Mahindra had challenged the retrospective amendment in the High Court.
The IT services firm employs over one lakh people, many of whom would have been eligible to get extra bonus retrospectively.
The court is yet to issue a copy of the ruling that will have finer details, including whether the stay will be applicable only to Tech Mahindra or other companies as well.
The retrospective operation of the Amendment Act imposed a harsh financial burden on Tech Mahindra, more so since the accounts for financial year 2014-15 had been finalised and closed much prior to the impugned amendment.
Other corporations in the recent past have filed petitions in other High Courts — including Allahabad, Gujarat, Calcutta, Kerala and Madras High Courts — and have received similar stays .
Tech Mahindra had challenged that the retrospective operation of the Amendment Act with effect from April 1, 2014, and the amendment introduced vide Section 3 of the Amendment Act insofar as the words “or the minimum wage for the scheduled employment, as fixed by the appropriate government, whichever is higher” that has been inserted in Section 12 of the Payment of Bonus Act, 1965 are illegal and unconstitutional and, hence, liable to be struck down.
Tech Mahindra’s lawyer Raj Panchmatia, Partner at Khaitan & Co, confirmed the court’s interim ruling but refused to comment on the ruling’s direct impact on Tech Mahindra.
Tech Mahindra did not respond to requests for a comment.
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