Anticipating elections, the United Progressive Alliance government plans to introduce an ordinance to relax the rules on the payment of bonus by the private sector and the Central government ahead of the festival season.

The ordinance will raise the eligibility limit of bonus payments to those who earn Rs 10,000 a month as basic salary and dearness allowance, from the earlier cut-off of Rs 6,000 a month.

It also proposes to raise the bonus calculation ceiling from Rs 2,500 to Rs 3,500.

"We may introduce a proposal regarding bonus at the Cabinet meeting next week. The matter has been pending for a long time and we need to act on it," Labour Minister Oscar Fernandes told Business Standard on Thursday.

The payout proposal is broadly in line with recommendations of the 41st session of the Indian Labour Conference held in April 2007, and is the result of a long-pending demand of the trade unions, particularly the Communist Party of India-Marxist-affiliated Centre for Indian Trade Unions.

Though the government had accepted the ILC's recommendations, it had put them in abeyance citing the procedures involved (an amendment to the Bonus Act, 1965) and the financial implications.

An expenditure department official said the government had paid between Rs 300 crore and Rs 350 crore last year on account of ad hoc bonus payment at a maximum Rs 2,467 per employee.

The additional liability for the government was still to be calculated, a key labour ministry official added.

A CITU delegation met Fernandes today and its president M K Pandhe said: "They had promised to raise the ceiling at the last ILC. We are pressuring the government, which is not interested in workers' welfare."

CITU National Secretary and Rajya Sabha MP Tapan Sen said bonus was hardly ever paid and "the Bonus Act of 1965 is just a showpiece."

According to Sen, if the changes take place, the minimum bonus (currently Rs 833) will increase by at least Rs 1,000.

In August last year, Prime Minister Manmohan Singh had said: "I agree that current ceilings were set more than a decade ago. We will soon take a favourable decision on it."

Eyeing this as a major opportunity to woo organised labour, both the Congress and the Left parties are keen to cash in on it.

While the government wants to take swift action and announce it as a festival gift, CITU wants to showcase this as a result of its pressure on the UPA government.