Sections 29 and 30 of the Code on Wages, 2019: Disqualification for Bonus and Treatment of Establishments
Sections 29 and 30 of the Code on Wages, 2019 deal with two important aspects of statutory bonus. Section 29 specifies the circumstances in which an employee dismissed from service is disqualified from receiving bonus. Section 30 explains when different departments, undertakings and branches are to be treated as parts of the same establishment for computing bonus.
Sections 29 and 30 at a glance
- Section 29 deals with disqualification of an employee from receiving bonus following dismissal for specified misconduct.
- The specified grounds include fraud, riotous or violent behaviour, theft, misappropriation, sabotage and conviction for sexual harassment.
- Section 30 generally treats departments, undertakings and branches as parts of the same establishment when bonus is computed.
- A department, undertaking or branch may be treated separately in the circumstances stated in the proviso to Section 30.
Section 29 - Disqualification for Bonus
Section 29 provides a specific statutory rule governing disqualification from bonus. Its opening words, "Notwithstanding anything contained in this Code", give the provision overriding effect within the Code where its conditions are satisfied.
29. Disqualification for bonus. Notwithstanding anything contained in this Code, an employee shall be disqualified from receiving bonus under this Code, if he is dismissed from service for--
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment; or
(d) conviction for sexual harassment.
Meaning and effect of Section 29
Section 29 links the disqualification to dismissal from service for one of the grounds expressly specified in the provision. It is therefore important to distinguish the statutory grounds in Section 29 from other forms of misconduct or termination.
The four statutory categories are fraud; riotous or violent behaviour on the premises of the establishment; theft, misappropriation or sabotage of property of the establishment; and conviction for sexual harassment.
What does "notwithstanding" mean?
A "notwithstanding" clause is commonly described as a non-obstante clause. In Section 29, it indicates that the disqualification rule operates despite other provisions of the Code where the statutory requirements of Section 29 are fulfilled.
Dismissal is an important element
The language of Section 29 refers specifically to an employee who "is dismissed from service" for one of the listed grounds. The statutory text should therefore be applied to the facts and circumstances of the particular employment action, including the stated ground for dismissal.
Section 30 - Establishments to Include Departments, Undertakings and Branches
Section 30 lays down the general rule for deciding whether different departments, undertakings or branches are to be combined for the purpose of computation of bonus under the Code.
30. Establishments to include departments, undertakings and branches. Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Code:
Provided that where for any accounting year a separate balance sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus, under this Code for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus.
General rule under Section 30
The general rule is that the different departments, undertakings and branches of an establishment are treated as parts of one establishment for computing bonus. This rule applies whether those units are situated at the same place or at different places.
Separate balance sheet and profit and loss account
The proviso addresses a situation in which a separate balance sheet and profit and loss account are prepared and maintained for a department, undertaking or branch for an accounting year. Subject to the further condition contained in the proviso, that unit is treated as a separate establishment for computation of bonus for that year.
Important exception in the proviso
Separate accounts do not automatically determine the issue in every case. The final part of the proviso states an exception where the department, undertaking or branch was, immediately before the commencement of the accounting year, treated as part of the establishment for computation of bonus.
Relationship between Sections 29 and 30
Both provisions form part of the bonus framework under the Code on Wages, 2019, but they address different questions. Section 29 concerns whether an employee dismissed for specified reasons is disqualified from receiving bonus. Section 30 concerns the organisational unit or establishment by reference to which bonus is computed.
Related bonus provisions
Sections 29 and 30 should be read as part of the wider statutory scheme governing bonus. The immediately preceding provisions include Section 26 on eligibility for bonus and Sections 27 and 28 on proportionate reduction and computation of working days.
The provisions following Section 30 deal further with computation and payment of bonus, including allocable and available surplus. Accordingly, an individual bonus question may require consideration of several connected provisions rather than Section 29 or Section 30 in isolation.
Legal information updated for the current Code on Wages framework. Readers should also check applicable Central or State rules and notifications where relevant.