How do we make a bonus / variable / adhoc payment to an employee

How do we make a bonus / variable / adhoc payment to an employee

There are multiple ways to model and pay bonus or any other variable component payment to employee.

1. Monthly variable – if the payout is to be done every month then it can be modeled as a Monthly Taxable, Variable head. Max value can be given to control the outer limit of the payment.

2. Annual variable – if the payout done only once in the year then it can be modeled as Annual Taxable, Variable head and the month on which the payment is to be made is specified.

3. Adhoc payments based on management's decision – if the payout is not planned and is done on an adhoc and need basis then the best design is to keep it out of the salary structure and manage it as an adhoc payment when payroll is being run.

4. Payment of Statutory Bonus - this is for Indian companies. Refer to the article on Payment of Statutory Bonus for more details

Refer to the article on Payroll process - Step 2 on details of how to make Variable an Adhoc Payments.


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