If we give a bonus along with salary to an employee every month, then in this situation bonus will be added to the contribution of ESIC or not?

If we give a bonus along with salary to an employee every month, then in this situation, will the bonus be added to the contribution of ESIC or not?

If we add the bonus to the ESIC contribution, what effect will it have on statutory compliances?

If we do not add the bonus to the ESIC contribution, what effect will it have on statutory compliances?

How can we fulfill bonus compliance in a good way?

Dear Aditya,

Bonus is a payment based on the performance of the establishment during the accounting year, and hence it can be ascertained only after balancing the accounts at the close of the year. Therefore, it is not possible to tentatively arrive at the quantum of the bonus to pay in equated monthly installments beforehand.

Alternatively, you may consider paying a monthly bonus advance equivalent to the minimum bonus to avoid its inclusion in the monthly payments to ESI and EPF.

The advance payments can be adjusted later against the bonus that would be determined at the end of the year.

Thanks, Sir. Thanks for your valuable view, @Umakanthan.

It is always better to pay Statutory Bonus at the end of the accounting year based on the performance of the Organization. If any organization is interested in paying it on a monthly basis, it must be booked in the books of account as an advance, not as a normal payment. If it is considered a normal payment, then it will attract ESI, as any payment made at intervals of a maximum of 2 months is considered for ESI.

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity