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Section 37: Time limit for payment of bonus

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IV: Payment of Bonus
Competent Labour Forum
Act No. 29 of 2019
Section 36 All 67 Sections of Code on Wages, 2019 Section 38

Legal Commentary & Landmark Judgments: Section 37

Section 37 prescribes the statutory time limits for the payment of bonus, mandating that all bonus amounts payable under the Code shall be paid within eight months from the close of the accounting year, or within one month from the date an industrial award becomes enforceable where a dispute is pending.

  • Standard Eight-Month Disbursement Cut-Off: Section 37(a) requires all bonus payments to be credited to eligible employees' bank accounts within eight months from the close of the financial year (e.g., by November 30 for an accounting year ending March 31).
  • Dispute / Award-Linked Timeline: Section 37(b) provides that where an industrial dispute regarding bonus is pending before an arbitrator or Industrial Tribunal, bonus must be paid within one month from the date the award becomes enforceable.
  • Government Discretionary Extension Proviso: Section 37 proviso empowers the appropriate Government, upon an application by the employer showing sufficient cause, to extend the eight-month period up to a maximum aggregate period of two years.
Key Landmark Precedents:
  • Workmen of The Straw Board Manufacturing Co. Ltd. v. Straw Board Manufacturing Co. Ltd. (1974) 4 SCC 681: The Supreme Court emphasized that bonus is a deferred wage and profit share that must be disbursed strictly within the statutory eight-month period to meet workers' festive and living requirements.
  • State of Rajasthan v. Hari Ram Maurya (2007) 12 SCC 376: The Supreme Court affirmed that statutory payment deadlines under labor enactments are mandatory public obligations, and administrative delays attract penal interest and statutory prosecution.
Courtroom Practice & Strategic Litigation Guidance:

For corporate employers following the April-March fiscal year, bonus calculations, audits, and bank disbursements must be fully concluded on or before November 30. If unforeseen audit complications or financial crises prevent timely payment, an application for extension under Section 37 proviso must be submitted to the Labour Commissioner before the eight-month deadline expires; retrospective extension applications are routinely rejected.

Section 36 All 67 Sections of Code on Wages, 2019 Section 38