fixed incentive paid to employee is liable cont. under esi act....i.e. employee is getting regularly treated under the esi wage. if employee getting incentive once in a three months. or once in in fourth month no esi deduction of esi cont....
From India, Bhilai
2From India, Bhilai
What will be problem if you show the incentive earnings every month in the payslip. Incentives is a part of earnings and definitely show in the payslip for the information of the employee. If you are avoiding the contribution of ESI which is not proper and giving a room for manipulation and depriving the rights of employee.
Adoni Suguresh
Labour Laws Consultant
From India, Bidar
Adoni Suguresh
Labour Laws Consultant
From India, Bidar
You can include incentive in the pay slips if you want to have a transparency. But when you include it the earnings will fluctuate every month and as a result of this you may have to rework the list of employees who goes out of ESI coverage accordingly. In a simple example, if due to higher incentive pay out in the month of April, obviously an employee goes out of ESI cover, but in the next month, due to lesser incentive, his salary would become less than 15000 and accordingly, may come again under ESI. This can be avoided if incentive is paid in an interval of more than two months and as separate payment.
Now if you pay productivity bonus, will you show it in the pay slip? No. When there is a reimbursement like medical reimbursement, like medical or travel, the payment of which is purely based on production of bills, the same is paid not through payroll but as separate payments under employee benefits account. In the same line, there is nothing wrong in paying incentives separately. There is no manipulation also. This is not to deprive any right nor to gain something by way of ESI contribution. After all, ESI is applicable to those whose wages are less than 15000 and if you count the number of employees under the ESI, it is at a decrease because in organised sector, we cannot find a salary which is less than 15000.
My advice is that you should include only fixed part of salalry in the payslip and separate the variable parts which are based on certain conditions from it.
Madhu.T.K
From India, Kannur
Now if you pay productivity bonus, will you show it in the pay slip? No. When there is a reimbursement like medical reimbursement, like medical or travel, the payment of which is purely based on production of bills, the same is paid not through payroll but as separate payments under employee benefits account. In the same line, there is nothing wrong in paying incentives separately. There is no manipulation also. This is not to deprive any right nor to gain something by way of ESI contribution. After all, ESI is applicable to those whose wages are less than 15000 and if you count the number of employees under the ESI, it is at a decrease because in organised sector, we cannot find a salary which is less than 15000.
My advice is that you should include only fixed part of salalry in the payslip and separate the variable parts which are based on certain conditions from it.
Madhu.T.K
From India, Kannur
Hi colleagues,
I wish to clarify by citing various terminologies here wrt your post:
INCENTIVE BONUS: As per the decision of the Supreme Court delivered on 8.3.2000 in the case of M/s.Whirlpool India Ltd. Vs. ESIC in civil appeal No.1903 of 2000, additional remuneration to become wages has to be paid at intervals not exceeding two months as distinguished from being payable. Thus, there has to be actual payment and the payment of production incentive does not fall either under the 1st part or last part of the definition of the term wages as defined in Sec.2(22) of the Act, hence no contribution is payable on the incentive bonus, provided the periodicity of payment is more than 2 months.Obviously,in line of this verdict, you may devise a scheme that allows quarterly calculation for payment and it can reflect in salary slip as well.
PRODUCTION BONUS:Production Bonus like incentive bonus is paid to the workers as additional remuneration and hence like incentive bonus such additional remuneration in order to become wages has to be paid at intervals not exceeding 2 months as distinguished from being payable. Thus, there has to be actual payment and hence no contribution is payable, provided periodicity of the payment is more than 2 months.
INAM/EX-GRATIA PAYMENT: Inam represents a payment made by the employer to any employee as a reward for the services rendered by him for which he is/was not under obligation to render the same under the contract of service which is expressed or implied but does not include the payment which have been made to an employee in fulfillment of contract of service. This may include exgratia payment.
Where Inam is being paid for special skill or higher responsibilities/additional duties, it may be taken as remuneration and contribution is payable.
Where the employer has introduced the scheme of Inam but according to terms and conditions the employer has no right to withdraw it or revise it, the same may be treated as wages and contribution is payable.
Where the employer has introduced the scheme of Inam and he has right to revise or withdraw it at his discretion, the payment of Inam under such scheme may not be treated as wages and contribution is not payable provided the payment is made at an interval exceeding two months..
Where there is no scheme of Inam in writing but still employer might be making payment under the head Inam on the basis of some understanding between the parties, in such cases, the nature of payment and its periodicity may be ascertained and whether payment of Inam is an exgratia payment which is not covered by the contract of service. In case the periodicity is more than 2 months, no contribution may be charged.
Regds,
RDS Yadav
Labour Law Adviser
navtaranghrs@gmail.com.
From India, Delhi
I wish to clarify by citing various terminologies here wrt your post:
INCENTIVE BONUS: As per the decision of the Supreme Court delivered on 8.3.2000 in the case of M/s.Whirlpool India Ltd. Vs. ESIC in civil appeal No.1903 of 2000, additional remuneration to become wages has to be paid at intervals not exceeding two months as distinguished from being payable. Thus, there has to be actual payment and the payment of production incentive does not fall either under the 1st part or last part of the definition of the term wages as defined in Sec.2(22) of the Act, hence no contribution is payable on the incentive bonus, provided the periodicity of payment is more than 2 months.Obviously,in line of this verdict, you may devise a scheme that allows quarterly calculation for payment and it can reflect in salary slip as well.
PRODUCTION BONUS:Production Bonus like incentive bonus is paid to the workers as additional remuneration and hence like incentive bonus such additional remuneration in order to become wages has to be paid at intervals not exceeding 2 months as distinguished from being payable. Thus, there has to be actual payment and hence no contribution is payable, provided periodicity of the payment is more than 2 months.
INAM/EX-GRATIA PAYMENT: Inam represents a payment made by the employer to any employee as a reward for the services rendered by him for which he is/was not under obligation to render the same under the contract of service which is expressed or implied but does not include the payment which have been made to an employee in fulfillment of contract of service. This may include exgratia payment.
Where Inam is being paid for special skill or higher responsibilities/additional duties, it may be taken as remuneration and contribution is payable.
Where the employer has introduced the scheme of Inam but according to terms and conditions the employer has no right to withdraw it or revise it, the same may be treated as wages and contribution is payable.
Where the employer has introduced the scheme of Inam and he has right to revise or withdraw it at his discretion, the payment of Inam under such scheme may not be treated as wages and contribution is not payable provided the payment is made at an interval exceeding two months..
Where there is no scheme of Inam in writing but still employer might be making payment under the head Inam on the basis of some understanding between the parties, in such cases, the nature of payment and its periodicity may be ascertained and whether payment of Inam is an exgratia payment which is not covered by the contract of service. In case the periodicity is more than 2 months, no contribution may be charged.
Regds,
RDS Yadav
Labour Law Adviser
navtaranghrs@gmail.com.
From India, Delhi
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Conf_RevMeeting _CPFC_20570_MOM 10% refund on admin charges incentive.pdf
Incentive plans for managers.doc
Fifteen great ways to improve your incentive programmes.ppt