Bonus Entitlement for Workers in Trust-Operated Factories: Supreme Court of India

In the judgment dated April 2, 2025, in The Management of Worth Trust v. The Secretary, Worth Trust’s Union, the Supreme Court of India held that workers employed in factories operated by charitable trusts are entitled to benefits under the Payment of Bonus Act, 1965.

The dispute arose with the ‘Workshop for Rehabilitation and Training of the Handicapped Trust,’ originally established by the Swedish Red Cross Society, which claimed exemption from bonus payments under Section 32(v)(a) or (c) of the Payment of Bonus Act, 1965. The workers’ union argued that as the trust was engaged in commercial activities—including the manufacture and sale of automobile parts—and was generating profits, its employees were entitled to statutory bonuses.

The Supreme Court upheld the decision of the Madras High Court, confirming that the trust’s industrial operations fall within the scope of the Factories Act, 1948, and the Industrial Disputes Act, 1947. The Court emphasized that engagement in charitable activities does not exempt an organization from statutory obligations toward its employees. Consequently, the trust was directed to pay bonuses to its workers in accordance with the Payment of Bonus Act, 1965.