Is It Fair to Exclude Statutory Bonus from Gross Salary for ESIC Deductions?

I am now deducted for ESIC; however, my salary is 21500. When questioned, they say statutory bonus is excluded from the gross salary, hence it comes to 20500, which is as per government order. Is this the right practice to show the statutory bonus in gross and later exclude the statutory bonus for ESIC?

PLEASE ADVICE

Bonus is paid monthly or not, that is a basic point to discuss. If paid monthly, then it is part of the salary. If calculated monthly but paid yearly, then it is excluded.

In my opinion, Rs. 21,000 for ESI deduction. I think Rs. 21,000 is the maximum limit, and it's for basic wages only on which PF & ESI are accounted.

Can anyone tell me what the contribution rate is for the employer's side in ESIC after the limit for ESIC has been increased?

Contribution Rate ESIC on Gross Wages:
Employee: 1.75% (1% in newly notified areas)
Employer: 4.75% (3% in newly notified areas)
Total: 6.5% (4% in newly notified areas)

Please let me know if you need further assistance.

Dear Prasad,

Any payment made at intervals not exceeding two months shall attract ESI. Therefore, monthly payment of bonus shall be admissible for ESI. However, while monthly payment of bonus is a violation of the Payment of Bonus Act, 1965, Section 19(B) of the said act can be read as follows: in any other cases within the period of eight months from the close of the accounting year.

Thanks & Regards,

V SHAKYA
HR & Labour, Corporate Laws Advisor