MCQs on The Code on Wages, 2019: Payment of Bonus & Other Provisions
Labour Laws in India
1. The statutory minimum bonus payable under Section 26, even if an employer has no allocable surplus, is:
(a) 8.33% of the wages or ₹100, whichever is lower.
(b) 8.33% of the wages or ₹100, whichever is higher.
(c) 20% of the wages earned in the accounting year.
(d) As determined by an agreement between employer and employees.
Answer: (b) 8.33% of the wages or ₹100, whichever is higher.
Explanation: Section 26(1) mandates an annual minimum bonus calculated at 8.33% of wages or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus.
2. For the purpose of calculating bonus, if an employee’s wages exceed the amount determined by the appropriate Government, the bonus shall be calculated as if his wage were:
(a) The actual wage drawn by the employee.
(b) The amount determined by the Government or the minimum wage, whichever is lower.
(c) The amount determined by the Government or the minimum wage, whichever is higher.
(d) A fixed sum of ₹15,000 per month.
Answer: (c) The amount determined by the Government or the minimum wage, whichever is higher.
Explanation: Section 26(2) specifies that for employees drawing wages above the notified ceiling, the bonus is calculated on the ceiling amount or the minimum wage fixed by the Government, whichever is higher.
3. The maximum bonus payable under the Code, when the allocable surplus exceeds the amount required for the minimum bonus, is capped at:
(a) 8.33% of the wages.
(b) 20% of the wages.
(c) 25% of the wages.
(d) There is no maximum limit if there is sufficient surplus.
Answer: (b) 20% of the wages.
Explanation: Section 26(3) states that when allocable surplus permits a higher bonus, it is subject to a maximum of twenty per cent. of such wages. Section 26(5) also reinforces this cap for any bonus based on production or productivity.
4. According to Section 29, an employee shall be disqualified from receiving bonus if dismissed for:
(a) Chronic absenteeism.
(b) Inefficiency in performance.
(c) Theft of the employer’s property.
(d) Participating in an illegal strike.
Answer: (c) Theft of the employer’s property.
*Explanation: Section 29 lists specific grounds for disqualification: fraud, riotous/violent behaviour, theft/misappropriation/sabotage, and conviction for sexual harassment. General absenteeism or inefficiency are not listed grounds.*
5. The allocable surplus for the purpose of bonus calculation is what percentage of the available surplus for an establishment other than a banking company?
(a) 60%
(b) 67%
(c) 75%
(d) 80%
Answer: (b) 67%
*Explanation: Section 31(1) clearly defines the allocable surplus as sixty per cent. in the case of a banking company and sixty-seven per cent. in the case of any other establishment.*
6. The time limit for payment of bonus under Section 39 is within how many months from the close of the accounting year?
(a) Two months
(b) Six months
(c) Eight months
(d) Twelve months
Answer: (c) Eight months
Explanation: Section 39(1) stipulates that the bonus must be paid within eight months from the close of the accounting year. This period can be extended by the appropriate Government, but not beyond a total of two years.
7. Which of the following entities is explicitly excluded from the application of the Bonus chapter under Section 41?
(a) A private limited company employing 30 persons.
(b) Employees employed by the Indian Red Cross Society.
(c) An establishment in the public sector which is in competition with the private sector.
(d) A newly set up factory in its fifth year of operation.
Answer: (b) Employees employed by the Indian Red Cross Society.
Explanation: Section 41(1)(e) explicitly excludes employees of the Indian Red Cross Society, universities, hospitals, and other institutions established not for purposes of profit from the application of the bonus provisions.
8. As per Section 45, what is the maximum period of limitation for filing a claim before the authority?
(a) One year from the date the claim arises.
(b) Two years from the date the claim arises.
(c) Three years from the date the claim arises.
(d) There is no period of limitation.
Answer: (c) Three years from the date the claim arises.
Explanation: Section 45(6) sets a limitation period of three years. However, the authority has the power to entertain a claim after three years if the applicant shows sufficient cause for the delay.
9. Under Section 54, what is the key procedural safeguard provided to an employer before initiating prosecution for offences like non-maintenance of records?
(a) A mandatory warning must be issued.
(b) An opportunity to comply with the Code by way of a written direction.
(c) A preliminary hearing before a judicial magistrate.
(d) A notice for composition of offence.
Answer: (b) An opportunity to comply with the Code by way of a written direction.
*Explanation: Section 54(3) introduces a facilitative approach, requiring the Inspector-cum-Facilitator to give the employer a written direction and a time period to comply with the provisions before initiating prosecution, for the first violation.*
10. The burden of proof in a claim for non-payment of wages or bonus, as per Section 59, lies on the:
(a) Employee.
(b) Employer.
(c) Inspector-cum-Facilitator.
(d) Trade Union.
Answer: (b) Employer.
*Explanation: Section 59 shifts the burden of proof onto the employer. Once a claim for non-payment is filed, the burden to prove that the dues have been paid is on the employer.*
11. As per Section 46, a dispute between an employer and employees regarding eligibility for payment of bonus is deemed to be:
(a) A civil suit.
(b) A criminal complaint.
(c) An industrial dispute.
(d) A matter for arbitration as per the employment contract.
Answer: (c) An industrial dispute.
Explanation: Section 46 states that such disputes shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947.
12. The composition of the Central Advisory Board, as per Section 42, must include:
(a) A majority of representatives from employers.
(b) An equal number of representatives from employers and employees.
(c) A majority of independent persons.
(d) Only representatives from the Central Government.
Answer: (b) An equal number of representatives from employers and employees.
Explanation: Section 42(1) mandates that the Board consists of (a) representatives of employers, and (b) representatives of employees which shall be equal in number to the employers’ representatives.
by
Tanmoy Bhattacharyya
High-Level MCQs on The Code on Wages, 2019 (1st Set)
High-Level MCQs on The Code on Wages, 2019 (2nd Set)
