Hitherto, only those drawing a monthly salary of up to Rs 3,500 were eligible to claim bonus.

The Cabinet has approved the amendment to Section 12 "to raise the eligibility limit for payment of bonus from the salary or wage of Rs 3,500 to Rs 10,000 per month," Labour Minister Oscar Fernandes said.

He said construction workers, even if they have worked for a month with builders or contractors, would also be eligible to avail a proportional bonus from their employers.

The decision would benefit seven per cent of the total workforce in the country, which is working in the organized sector, said the Minister.

The payout proposal is broadly in line with recommendations of the 41st session of the Indian Labour Conference (ILC) held in April this year, and is the result of a long-pending demand of the trade unions, particularly the CPI(M)-affiliated Centre for Indian Trade Unions (CITU).

Sources said since the next session of Parliament would be called in November, government may bring an ordinance for the purpose.

Though the minister declined to comment on the financial implications of the decision, sources said the government had paid between Rs 300 crore (Rs 3 billion) and Rs 350 crore (Rs 3.5 billion) last year on account of ad hoc bonus at a maximum Rs 2,467 per employee.