Esic Contribution On Productivity Allowance - CiteHR
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Our Factory is covered under ESCI @ Nashik MIDC AREA.I would like to know the legal provision regarding ESIC contribution on Productivity Allowance payable to our workmen on achieving the rejection percentage below 2% in a month.Regards
Dear Anonymous,
If you are paying the productivity allowance every month or at the intervals not exceeding two months, ESI attracts on this payment.
This payment is depends on achievement. You should not call it as allowance. According to me, it is additional remuneration. 
If such additional remuneration is paid at interval beyond two months, the SSO has to verify thoroughly as to whether there is any agreement / settlement between the employer and employees, either express or implied and report the facts with documentary evidence for taking decision by RO.
Some employers are showing certain additional payments payable once in a quarter but paying some amount every month as advance against such additional payment and book the final amount paid in quarter as quarterly incentive. This payment is amounts to wages under the Act and ESI attract. 
In your case, the additional payment is based on monthly achievement. This fact also you have to bare in your mind while making the payment.

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