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Dear Mr. Mehta,
If employer gives fix loan every month say Rs. 2,000/- and recover that loan after three months in quarterly incentive. In that case in account books incentive will be paid after every three months but employee will get some amount ( not exact incentive amount) every month.
Will ESI contribution will be still payable on incentive ?
We also pay incentive every month. Don't wish to delay. what is the best way out ?
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Is it OK if employer pays after every two months ? Or it should be minimum three months ? Or it should be two months and one day ? As per my knowledge law says above two months .
Dear Friends,



I have gone through the responses up till now and would like to submit as under:

Question is on Performance Incentive. One can call it as Incentive Bonus or Production Bonus. It is an additional remuneration.

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.

The queriest said that this payment is not possible to make it quarterly. Somebody suggested him to pay it monthly but to so it on quarterly basis so that no ESIC attract.

Please bear in mind that, when 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 as to such payment attracts ESIC or not.

Some employers are showing certain additional payments payable once in a quarter and paying some amount every month as advance against such additional payment. They book the final amount i.e. total of three month advance payment as quarterly incentive as suggested here also by one of the learned members. This payment amounts to wages only under the Act and ESI attract on it unless there is an agreement / settlement to make this payment quarterly or so, on the basis of performance-quarterly or so.

One should not forget that such additional payment is based on monthly performance, generally.

Hope everyone understood what I mean to say.
If the amount of performance incentive is paid once or twice in year then it will not calculated in ESIC. But if it is paid in every month, then it will calculated.
dear sir,
there are some employee, whom gross salary is less than esi limit. but we pay incentive monthly basis and they cross esi limit. then they will be eligible for esi.
Hi all,
please let me know if an employee gross salary is 20500/- per month and he is also doing over time and earn 38000/- in all, is he eligible to be in esic or not. If yes / no plz share the reason and if any documentary evidence is their plz do share it as well.
Dear Vimal,
Eligibility :
All employees of a covered unit, whose monthly incomes (excluding overtime, bonus, leave encashment) does not exceed Rs. 21,000 per month, are eligible to avail benefits under the Scheme.
Hii Friends,
If any one have the circular of the incentive rules which is , If we paid monthly incentive then we are include the gross salary + incentive = actual ESIC deduction amount and/or if we paid quarterly incentive then its exclude from the salary.Kindly share the circular if any one have.
Prakash Kalal
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