It depends on the company. It could be part of an employee's CTC but not included in the wages. Wages are fixed and calculated based on the number of working days. However, performance-linked incentives/variable pay are paid depending on the company's performance, so they can be kept separately as they will not deduct any statutory requirements either.
Thanks for your reply. I wanted to know, can incentives be added to the fixed salary to show that the total income of an employee is more than the minimum wages of the state?
No, you can't do that. If you add a component as an incentive/allowance in your salary, then it has to be calculated based on your salary calculation. You can't keep it separately. In the case of ESI, yes, you can do it, but not when fixing minimum wages.
Minimum wages in each state are defined with specific components. Usually, it includes only the basic salary and Dearness Allowance (DA). Therefore, you cannot include incentives, as they are not part of the basic salary or DA.
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