Doing Business in India - RSM Austria

Employee
benefit
Employees’
State
Insurance
Bonus
What is it?
I t p r o v i d e s
w o r k e r s w i t h
medical relief, sick
pay, m a te r n i ty
b e n e f i t s a n d
compensation for
e m p l o y m e n t
injuries, including
e m p l o y m e n t
related fatalities.
Contributions by
the employer and
the employee are
p a i d t o t h e
Employee State
Insurance Scheme.
Annual payment of a
lump-sum bonus to
employees, which is
l i n k e d t o t h e
e m p l o y e r ’ s
profitability.
Applicability
Applicable to every
b u s i n e s s
organization in
I n d i a ( n o n -
seasonal)
Mandatory only
for employees
earning monthly
wages lesser than
Rs. 15,000 (US $
333).
Applicable to every
b u s i n e s s
organization in
India employing
2 0 o r m o r e
persons .
Mandatory only for
employees earning
monthly salary or
wages lesser than
Rs. 10,000 (US$
223).
Other details- like
cost to employer
15 days wages are
calculated as [15 /
26 * (wages of last
m o n t h o f
employment)]
Employee can be
entitled to better
terms of gratuity.
The employer and
e m p l o y e e a r e
r e q u i r e d t o
contribute 4.75%
a n d 1 . 7 5 %
respectively of the
wages
C o s t t o t h e
employer is 4.75%
of the wages
Employers must
pay a bonus of
6 0 % o f t h e
allocable surplus,
which is calculated
after deducting a
r e t u r n o n
investment from
profits after tax,
limited to 20% of
a n e m p l oye e’s
salary.
T h e a c t a l s o
provides for a
minimum bonus of
8 . 3 3 % o f a n
employee’s salary,
which is payable
e v e n i f t h e
employer is in
losses.
The bonus must be
paid within eight
months after the
c l o s e o f t h e
accounting year.
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