Tata Steel has honoured its three-year old commitment to its staff and announced a bonus payment.
The Company has said in an official statement that it will shell out Rs 235.54 cr as payment of annual bonus for the fiscal 2019-20.
On September 14, the Tata Steel management signed a Memorandum of Settlement with the Tata Workers Union (TWU). The memorandum was signed by T V Narendran, CEO and managing director, Tata Steel and Ravi Prasad, president, TWU.
Normally, the annual bonus is calculated on the basis of 50 per cent on production and 50 per cent on profitability. This year, however, an agreement was made to pay annual bonus based on 1.5 per cent of net profit. The amount was calculated basis the performance achievement on profitability, productivity and safety parameters, to be distributed as annual bonus to all the eligible employees at different locations of the Company.
As many as 12,807 employees are eligible for this bonus. Since a majority of Tata Steel employees draw salary/wages higher than the limit laid down in the Payment of Bonus (Amendment) Act, 2015, they are not eligible for bonus under the Act. However, respecting old traditions, the Company pays bonus to all employees in the unionised category.
Tata Steel has reported losses in the past two quarters. During April-June 2020-21, the Company reported a consolidated loss of Rs 4,648.13 cr. During the fourth quarter of 2019-20, it posted a loss of Rs 1,615.35 cr. The official statement of the Company conveyed that despite a “difficult year”, the Company has kept its “three-year commitment” made earlier, of paying the complete bonus to the employees.
In August 2018, the union and management had mutually agreed to revise the existing annual bonus scheme, making it applicable for 2017-18, 2018-19 and 2019-20. A Memorandum of Settlement was signed to this effect between the management and TWU.