Jamshedpur, Sept. 5: A memorandum of understanding regarding annual bonus was signed between the Tata Steel management and the Tata Workers’ Union for the 2007-2008 fiscal today.

According to the agreement, the annual bonus for the accounting year 2007-08 would be calculated on the basis of the production and profitability.

The bonus would be based 50-50 on production and profitability.

According to official calculations, the annual bonus works out to be 9.26 per cent of the production and 10 per cent of the profitability, thus making a total of 19.26 per cent of basic and DA for the year 2007-2008.

However, on the request of Tata Workers’ Union and considering the centenary year of the Tata Group, the bonus amount for this year has been rounded off from 19.26 per cent to 20 per cent.

However, according to a communiqué issued by the Tata’s corporate communications, most employees of the steel company draw a salary higher than the limit laid down in the Payment of Bonus Act, 1965.

Such workers, the communiqué has stated, are not entitled for the bonus according to the act.

However, respecting Tata traditions, the company has decided to grant bonus to all employees in the unionised category any way.

The amount being paid across Tata Steel India operations would be Rs 113.8 crore for year 2007-2008.

Today the agreement was signed between B. Muthuraman, the managing director of Tata Steel, and Raghunath Pandey, the president of the Tata Workers’ Union.