Why Isn't My Bonus Part of My Gross Salary? Understanding ESIC Deductions

Question About Bonus and Gross Salary

Why is the bonus not part of the gross salary? I have seen a salary slip in which the bonus is mentioned. Will ESIC be deducted from the bonus?

Regards,
Robins Christian

Understanding Gross Salary and Bonus Payments

Gross salary is the total wages earned by an employee. Bonus payment under the Payment of Bonus Act 1965 is a statutory obligation of the employer and has nothing to do with the wages earned by the employee.

What you have seen in salary slips may not be a bonus under the Payment of Bonus Act 1965 but other types of bonuses like performance bonuses, etc., which employees receive as per their employment contract.

What you said, I understood, but I still have some confusion:

1. Can the employer show "BONUS" as part of the monthly gross in the salary slip?
2. Will ESIC be deducted on the bonus?

Regards,
Robins Christian

I agree with Sinha, sir. Bonus is not a part of the gross salary, but a performance bonus is a part of the employment contract. Still, ESIC is not calculated on any type of bonus, as per my knowledge.

Regards,
Chitra

Applicability of ESI on Salary Components

ESI will be applicable to any component appearing on the salary slip continuously for more than two months. If the company is also paying a statutory bonus continuously on a monthly basis, which is very rare and a challenging task, then ESI will be applicable to that.

Regards,
Kamal