Treasury okays bonus for employees of loss making SOEs

The Treasury has granted approval for the payment of bonus to employees of 52 StateOwned Enterprises (SOEs), including 17 loss-making enterprises, whose combine loss exceeded Rs 132 billion last year.

Issuing a circular this week, the Treasury’s Public Enterprises Department said bonus payments should be calculated based on the circular it issued in 2018 with an amendment to a clause by replacing a provision in the recently introduced Operational Manual for SOEs. It refers to sharing returns on investments.

The bonus will be calculated based on last year’s audited financial statements.

As per the effective circular, state corporations and fully state-owned companies that earned profits last year by reverting from loss-making status to profit-making status without paying any incentives to the staff will be entitled to a proposed bonus of Rs 15,000 while other institutions that have paid incentives will be eligible to pay Rs 13,500 as a bonus to its employees.

Those SOEs which have recorded a loss in the financial year 2020 but reduced the loss compared to the previous year will be entitled to a bonus amounting to Rs 5000. SOEs which continued to record losses over the years will be eligible for a bonus of Rs 3000 on sympathetic grounds towards the staff of such institutions, according to the circular.

Under the new Operational manual for SOEs, the listed State-owned institutions are mandated to channel the profits or surpluses to the consolidated fund/shareholders by way of levy or dividend as they are expected to generate a reasonable return on the investment.

The payment of bonus or profit- based incentives should be made to employees of SOEs after the distribution of levies/ dividends as applicable while payment of interim and final levies/dividends should be made within 15 days after the declarations are made, according to the SOE Operational Manual which came into effect on November 16. According to the Finance Ministry annual report for the financial year of 2020, 35 SOEs recorded a net profit of Rs. 166 billion even under the pandemic condition and the rest -- 17 SOEs -- recorded a loss of Rs. 132 billion in 2020.

To maintain the required liquidity in SOEs, the Treasury refrained from enforcing excessive levies on SOEs resulting in a reduction of the total collection of levies and dividends. It collected Rs. 17.6 billion compared to Rs. 27.6 billion in 2019, according to the report.