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When Employer is liable to pay a bonus | Chapter 4- Code on wages 2019

many HR confused about when the employer is liable to pay the bonus according to the new code on wages 2019, so here we discussed it.

Newly set up establishment:

Generally, newly set establishment faced a newly harder and challenges for making a profit, and for newly set up establishment profit-making is like a-

Drag out a Bottle from Dig

So, for the motive to give relaxation a deterrent provision in code of wages 2019

I.e exemption in payment of Bonus for newly set up establishment but subject to the condition

HR labour law Training

In a newly set up establishment, the bonus shall be paid as under:

  • In first 5 Accounting years – in which the employer sells the goods produced or manufactured by Him or renders services, a bonus shall be payable only in respect of the accounting years in which the employer deprives profit of such establishment, No set-off and set on is allowable
  • For 6th Accounting years – set-on it set-off in respect of the 5th and 6th Accounting years
  • For 7th Accounting years – set on and set off in respect of 5,6,7th Accounting years
  • For 8th Accounting years – from the right accounting years the provision of set-on and set-off shall apply in relation to such establishment as they apply in relation to any other establishment


An establishment shall not be deemed to be newly set up simply by reason of a change I. It’s location management, name or ownership

Shivam Jha

HR Ignite

(Industrial relation Advisor and professional)

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