Statutory Bonus & Gross Salary & ESIC Applicability On Same

Dear Seniors,
If a company pays statutory bonus of Rs 292/- on monthly basis to all contract employees skilled level, than would that Statutory Bonus get added in Gross Salary and subsequently attract ESIC @4.75% on same. Or will it not be added to gross. How it will be reflected in Salary Slip if it is paid monthly by principle employer
2nd Query) If Statutory Bonus is Paid yearly than when it has to be paid and how does it will reflect in salary slip in terms of Gross & ESIC
With Regards
Virag Shah
09727717230

Sub- stutory bonus
Dear Shah
Query No.1
statutory bonus paid annually does not count for contribution since it does not form part of the definition of wages under Sec.2(22) of the SSI Act as it is piad annually ie. at an interval of more than two months.
query no.2
As per sec 19 of the Payment of Bonus Act 1965 Statutory bonus shall be paid within 8 months from the date of closing of accounting year unless the Govt. extends the time limit.
B.Saikumar
HR & Labour Law consultant
Chipinbiz Consultancy. Pvt.Ltd
Mumbai
Tel: 022-28324234

Dear
Basically it is a typical question and every one will give his intrpretation in different way.
if annual statutory bonus is paid on monthly basis ,will attract ESIC contribution???
In my view yes it will attract ESIC contribution but it is quetion of intrpretation.However if it will be paid on quarterly basis ,no contribution will be paid on this payment.

Thanks Malik Sir,
I sum up if Stat bonus paid monthly it will added in Gross Salary and subsequently attract ESIC,
But if the same is paid Quarterly it will not Attract ESIC.
And paid Yearly than as suggested By Sai Sir it would not counted as contribution since it does not form part of the definition of wages under Sec.2(22) of the SSI Act as it is piad annually
Thanks Sir
With Regards
Virag Shah
09727717230

Dear Virag Shah,
Basically the motive of the payment of bonus act is to share the part of profit earned during accounting year with employee, naturally it will be decided after the end of accounting year whether the profit would have been earned by the company or not. so, if u tried to calculate this by month how does it worked out and decide the profit of the company?
Secondly the payment of bonus or the same amount need not accumulated with gross earning of the employee. u v 2 make this payment of bonus through FORM C which contents yearly days, wages etc.
So far ESI is concern it doesn\'t attract for the contribution under ESI when paid annually. but what Mr. Malik said is absolutely correct; if it convert into monthly definitely comes within the purview of ESI ACT.
Regards,
KIRAN KALE

Dear Virag,

1st Query) If a company pays statutory bonus of Rs 292/- on monthly basis to all contract employees skilled level, than would that Statutory Bonus get added in Gross Salary and subsequently attract ESIC @4.75% on same. Or will it not be added to gross. How it will be reflected in Salary Slip if it is paid monthly by principle employer

Answer - It has to be added in gross salary. pls visit the below site for better understanding. Any payment including bonus is paid for more than 2 months it is covered under ESI act.

ESIC-Chinta Se Mukti <link updated to site home> ( Search On Cite | Search On Google )

2nd Query) If Statutory Bonus is Paid yearly than when it has to be paid and how does it will reflect in salary slip in terms of Gross & ESIC.

As per Payment of Bonus Act bonus shall be paid within 8 months from the date of closing of accounting year. probably you can give it in diwali/dussehra(if your financial year is Apr - march)

Since you are paying yearly you can give the employees a bonus/Ex-gratia slip or show it seperately in the payslip.( It should not be added in gross and no ESI will be deducted)

Can you tel me that Bonus deduction from CTC every month and given to employees at the end of year is mandatory for employees or not.

Dear Virag

I am at my wit's end to understand as to how the statutory bonus under the Payment of Bonus Act can be paid on monthly basis. if you go through the provisions relating to computing the bonus, a decision to decide the quantum of bonus can be taken only at the time of preparation of balance sheet for the accounting year which happens at the end of it since the company shall arrive at the figure of gross profits and available and allocable surplus at the time of the annual closing. If that is the mandate of the Act, how statutory bonus can be paid every month. This necessarily suggests that the comapny shall arrive at P&L every month and pay bonus which is violative of the provisions of the Bonus Act. Assuming that bonus is computed once a year as per the Act but the same is paid in 12 equal monthly instalments. This again goes against Sec.19 of the Bonus Act which requires the employer to pay bonus within a period of 8 months from the close of accounting year. That means the Act grants 8 months time to the employer to pay the entire bonus amount due to an employee but does not say expressly that such bonus can be paid in equal monthly instalments. This is the issue you need to consider first, leave alone worrying whether it counts for ESI contribution or not.

B.Saikumar

HR & Labour Law Advisor

Mumbai

09930532927

I have a similar query relating to ESI on Bonus paid, please guide me.
In my company there are 15 employees, so we are covered under ESIC but not in Payment of Bonus Act as no. of employees are less than 20.
Do we need to pay ESI contribution on Bonus paid to employees ?, as bonus paid to employees is technically not a statutory bonus as no. of employees is less than 20 and its not mandatory for us to pay bonus.
Thanks and Regards

Sir,
I have one query regarding Bonus payment, i.e. I have resigned in the month of June 2017, but our company was not paid bonus for the year 2016-17, telling that they will not pay as employee leaving the company, for this where shall I give complaint and sent to the previous company.
Regards
NS Rao
Hyderabad