Understanding Employer Contributions: ESI, PF, Gratuity, and Bonus Explained

Hello,

Can anyone tell me what are the employer's contributions in ESI, PF, Gratuity, Bonus/Ex-Gratia, etc.?

Regards,
Priyanka

Hi Priyanka,

Find below the details of the same:

1. Employer's contribution in E.S.I is 4.75% per month of Gross/Month, whereas for the employee, it is 1.75% of gross/month.

2. PF contribution from both employees' and employers' sides is 12% of the Basic salary. Out of this 12%, 8.33% goes to the pension fund, and the remaining 3.67% goes to the provident fund only. Additionally, the employer has to pay an extra 0.5% as administrative charges.

3. Bonus is paid at the rate of 8.33% of annual wages or basic salary paid.

I hope the information is now clear to you.

Regards,
Amit Seth

You mentioned that, in addition to this, the employer has to pay an additional 0.5% as administrative charges. To whom? Can you please explain? I am a bit confused.

Additional Points on Employer Contributions

A/c No - 02: 1.1% of Total Wages {Administrative Charges}

A/c No - 21: 0.5% of Total Wages {Employees' Deposit-Linked Insurance Fund}

A/c No - 22: 0.01% of Total Wages {Administrative Charges for Employees' Deposit-Linked Insurance Fund}

Gratuity Calculation

As per the act, if any employee completes 5 years of continuous service, he/she may be eligible for gratuity. The calculations are:

Last basic pay * Number of years in service * (15/26)