Is Monthly Profit Sharing Considered Part of Your Wage If It's Separate from Salary?

gauttam1
Dear sir, is monthly profit distribution/incentive considered part of the wage if it is not included with the salary?

Regards,
Kumar Gautam
jkct15
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.
gauttam1
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?

Regards,
Kumar Gautam
jkct15
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.
saswatabanerjee
Understanding Minimum Wage Components

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.
If you are knowledgeable about any fact, resource or experience related to this topic - please add your views. For articles and copyrighted material please only cite the original source link. Each contribution will make this page a resource useful for everyone. Join To Contribute