In a landmark judgment that reinforces the rights of factory workers, including those with disabilities, the Supreme Court of India has held that the Payment of Bonus Act, 1965, applies to charitable trusts engaged in profit-making industrial activities. The ruling came in the case The Management of Worth Trust vs. The Secretary, Worth Trust Workers Union (Civil Appeal No. 20474 of 2019, decided on 2nd April 2025).
This verdict is a big win for differently abled workers employed in industrial units run by charitable organisations. It strengthens the legal framework around workers’ statutory rights in India.
🔍 Background of the Case
WORTH Trust, originally known as the Swedish Red Cross Rehabilitation Trust, was set up to rehabilitate leprosy-cured patients and other specially-abled persons. Over time, however, the trust diversified into the manufacturing sector, producing automobiles and industrial parts through its factories. While its origins were charitable, its operations post-1985 became profit-oriented.
Despite generating profits—or surplus, as termed in the Bonus Act—the trust refused to pay bonus wages, citing exemptions under Section 32(v) of the Payment of Bonus Act, 1965.
🧑🏭 The Workers’ Stand
The Worth Trust Workers Union, representing employees, most of whom are differently abled—claimed that:
- They work in factories governed by the Factories Act, 1948
- The trust earns profits through commercial manufacturing
- As such, the Bonus Act is fully applicable and workers are entitled to the minimum bonus of 8.33% under Section 10, and up to 20% bonus under Section 11, depending on allocable surplus
The Tribunal and subsequently the Madras High Court agreed with the Union. However, the Trust appealed to the Supreme Court.
⚖️ Supreme Court Verdict: A Game-Changer for Employment Law
The Supreme Court dismissed the appeal, clarifying:
“Just because a trust undertakes charitable activities does not mean it can escape its statutory obligations under labour laws.”
Key takeaways from the judgment:
- Factories run by charitable trusts are not exempt from the Bonus Act if they engage in commercial activities and generate surplus.
- The exemption under Section 32(v)(a) or (c) applies only to institutions like the Indian Red Cross Society or those not established for profit. WORTH Trust no longer qualifies.
- The bonus is a statutory right—ex-gratia payments made by the employer cannot substitute for the legal obligation of paying a statutory bonus.
The Court directed the Trust to pay pending bonuses from the year 1996-97 to date, after adjusting any ex-gratia amounts already paid.
Final Thoughts: A Win for Inclusivity & Fair Pay
This case sends a clear message: charitable status cannot be used as a shield to deny lawful entitlements to employees. If an organization is running factories, generating profits, and employing workers, then labour laws, including the Bonus Act, are applicable.
By upholding the rights of differently-abled employees, this decision is not just about compliance—it’s about dignity, inclusion, and economic justice.
Judgment:–
