Monthly Bonuses and ESIC: How Do They Affect Statutory Compliance?

Bonus and ESIC Contribution

If we give a bonus along with the salary to an employee every month, will the bonus be added to the contribution of ESIC or not?

Effect on Statutory Compliances

If we add the bonus to the ESIC contribution, what effect will it have on statutory compliances?

If we do not add the bonus to the ESIC contribution, what effect will it have on statutory compliances?

Fulfilling Bonus Compliance

How can we fulfill bonus compliance in a good way?

Bonus Payment and Compliance

Bonus is a payment based on the performance of the establishment during the accounting year, and hence it can be ascertained only after balancing the accounts at the close of the year. Therefore, it is not possible to tentatively arrive at the quantum of the bonus to pay in equated monthly installments beforehand.

Alternatively, you may consider paying a monthly bonus advance equivalent to the minimum bonus to avoid its inclusion in the monthly payments to ESI and EPF. The advance payments can be adjusted later against the bonus that would be determined at the end of the year.

Statutory Bonus Payment Considerations

It is always better to pay the Statutory Bonus at the end of the accounting year based on the performance of the organization. If any organization is interested in paying it on a monthly basis, it must be booked in the books of account as an advance, not as a normal payment. If it is considered a normal payment, then it will attract ESI, as any payment made at intervals of a maximum of 2 months is considered for ESI.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity