The main legal point established in the judgment is that 'attendance bonus' qualifies as 'bonus' and falls within the exceptions carved out from 'basic wages' as defined under Section 2(b)(ii) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

JUDGMENT

(Prayer: Writ petition filed under Article 226 of the Constitution of India, to call for the records relating to the Proceedings of the 2nd Respondent dated 16.09.2011 in Ref.No. ATA No. 131(13)2011 and quash the order passed therein and consequently direct the 1st respondent to pay the dues as assessed by the petitioner by the order dated 10.12.2010 in Ref. No.TN/SRO/Amb/31645/CC/A-1/2010.)

1. The short question that may arise for consideration in this writ petition is as to whether “attendance bonus” would fall within the scope of “basic wages” as defined in terms of section 2(b)(ii) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

2. To examine the above question, it may be necessary to refer to the definition of “basic wages” as defined under Section 2(b)(ii) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, which reads as under:

2(b). “basic wages” means all emoluments which are earned by an employee while on duty or [on leave or on holidays with wages in either case] in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include—

(i) the cash value of any food concession;

(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment

(iii) any present made by the employer;

A reading of the above definition would show that it provides for certain exclusions which inter alia includes overtime allowances, bonus, commission or any other similar allowances. The question is whether “attendance bonus” would fall within the exclusions carved out, in the said definition.

3. To answer the above question it may be necessary to examine as to whether the “attendance bonus” which has been extended/paid by the respondent company would constitute “bonus” or “any other similar allowances” for the purpose of Section 2(b)(ii) of the Act. If the answer to the above question is in the affirmative then the payments by way of  “attendance bonus” would fall within the exception/exclusion and thus may not attract section 6 of the said Act, which provides for contribution to be made by the employer to the provident fund. A reading of the definition clause of the Act would show that the expression “bonus” is not defined under the Act nor does it come with any limitation while being employed in Section 2(b)(ii) of the Act. Thus bonus of any kind would be covered within the expression “Bonus” employed in Section 2(b)(ii) of the said Act.

4. It may be relevant rather necessary to understand the nature of the “attendance bonus” in the instant case. Attendance bonus was paid every month to employees who reported for work on all 6 days in a week. In other words, if an employee failed to turn up for the required number of days, the attendance bonus was paid only on prorata basis. It is more of an inducement amount paid to the employees who reported to the work regularly without absenting themselves and without availing any leave, and observing full working hours without any permission to leave establishment before normal working hours. The bonus normally paid was to the extent of 20% of the earned basic wages. In the event of an employee availing one day leave in a week of the month, he will be losing 5% of the attendance bonus. If he avails 2 days leave on successive weeks, he will be losing 10% of the assured attendance bonus. For such of those employees who availed leave beyond 3 days, no attendance bonus was paid and similarly if leave was availed for more than 3 consecutive days as well, the employees will have to forego the attendance bonus. It was also made clear that the bonus was not statutory bonus as per the Payment of Bonus Act, 1965. In fact, the 1st r