Respected All,
Could anyone please guide me on whether ESIC and PF deductions are applicable when we pay increment arrears to employees? Additionally, I would like to know if it is mandatory to deduct ESIC & PF on any incentives paid to employees.
Your assistance on this matter would be greatly appreciated.
From India, Mumbai
Acknowledge(0)
Amend(0)
Could anyone please guide me on whether ESIC and PF deductions are applicable when we pay increment arrears to employees? Additionally, I would like to know if it is mandatory to deduct ESIC & PF on any incentives paid to employees.
Your assistance on this matter would be greatly appreciated.
From India, Mumbai
Acknowledge(0)Amend(0)
Arrears of Salary and ESI
Arrears of salary will not attract ESI. However, you must pay EPF on the amount. It should be paid along with the month's contribution; otherwise, it will be considered an arrear payment of PF on omitted wages. Therefore, care should be taken while paying PF on arrears of wages.
Incentives and PF/ESI Contributions
Incentives are outside the scope of wages for PF purposes. But if the incentive is paid every month along with wages, then it will attract ESI. The law states that any allowance paid to employees at intervals of more than two months shall be excluded from ESI contribution. Therefore, if you pay incentives every quarter, then it will not attract ESI.
From India, Kannur
Acknowledge(0)Amend(0)
4526Arrears of salary will not attract ESI. However, you must pay EPF on the amount. It should be paid along with the month's contribution; otherwise, it will be considered an arrear payment of PF on omitted wages. Therefore, care should be taken while paying PF on arrears of wages.
Incentives and PF/ESI Contributions
Incentives are outside the scope of wages for PF purposes. But if the incentive is paid every month along with wages, then it will attract ESI. The law states that any allowance paid to employees at intervals of more than two months shall be excluded from ESI contribution. Therefore, if you pay incentives every quarter, then it will not attract ESI.
From India, Kannur
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
PF ESIC.xls
WEST BENGAL INCENTIVES TO SEZ ON PF.doc