Dear seniors,
We have app. 200 employees and few are covered under ESI. We pay monthly incentive / bonus based on their performance. WE are paying salary and incentive together now.
(1) Case ONE : If gross salary is 8,000 PM and performance linked incentive varies from 500 to 2,000 PM . Should we pay esi contribution on 8,000 or 8,000 plus incentive ? We are paying incentive every month now but can pay it every two months or every months also.
(2) Case TWO : If gross salary is 14,000 PM and incentive is 3,000 - 6,000 PM , can we show whole earning above 15,000 and no need for ESI contribution ?
(3) What are the allowances on which ESI contribution is not applied like washing allowance ?
From India, Hyderabad
1We have app. 200 employees and few are covered under ESI. We pay monthly incentive / bonus based on their performance. WE are paying salary and incentive together now.
(1) Case ONE : If gross salary is 8,000 PM and performance linked incentive varies from 500 to 2,000 PM . Should we pay esi contribution on 8,000 or 8,000 plus incentive ? We are paying incentive every month now but can pay it every two months or every months also.
(2) Case TWO : If gross salary is 14,000 PM and incentive is 3,000 - 6,000 PM , can we show whole earning above 15,000 and no need for ESI contribution ?
(3) What are the allowances on which ESI contribution is not applied like washing allowance ?
From India, Hyderabad
1. Sir, Performance Linked Incentive, or whether you call the same by any name viz. incentive, production incentive, Inam, attendance bonus etc. etc. are all wages and contribution is payable.
2. The position, in respect of your above cases, in my opinion, may be as follows:
Case One & Case Two: Contribution is required to be paid on Rs.8000+ amount of incentive. On the basis of incentive, you can exempt any employee from ESI deduction provided that his total wages by adding incentive should be exceeding to Rs.15000/- per month. If during any contribution period, the total wages of employee becomes less than Rs.15000/-, then from that very month, the employee will again be coverable till close of such contribution period even if his total wages for next balance months in contribution period may exceed above coverable limit.
3. Washing Allowance is coverable as wages if the amount is paid to employees without any actual reference to provision of liveries or uniforms. If the employees are not required to bear any specific uniforms or liveries and the amount is paid every month, in my opinion, it is definitely "wages" as defined under said Act.
4. In case of any doubt, I will suggest you to discuss the issue with appropriate officer of ESIC to which your unit is attached viz.- Social Security Officer, or Director at the Regional Office level.
From India, Noida
2. The position, in respect of your above cases, in my opinion, may be as follows:
Case One & Case Two: Contribution is required to be paid on Rs.8000+ amount of incentive. On the basis of incentive, you can exempt any employee from ESI deduction provided that his total wages by adding incentive should be exceeding to Rs.15000/- per month. If during any contribution period, the total wages of employee becomes less than Rs.15000/-, then from that very month, the employee will again be coverable till close of such contribution period even if his total wages for next balance months in contribution period may exceed above coverable limit.
3. Washing Allowance is coverable as wages if the amount is paid to employees without any actual reference to provision of liveries or uniforms. If the employees are not required to bear any specific uniforms or liveries and the amount is paid every month, in my opinion, it is definitely "wages" as defined under said Act.
4. In case of any doubt, I will suggest you to discuss the issue with appropriate officer of ESIC to which your unit is attached viz.- Social Security Officer, or Director at the Regional Office level.
From India, Noida
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