Ad-Hoc Payment

Definition and Meaning:

Ad-hoc payments are non-periodic/one-time payments made outside of the regular payroll cycles and are therefore considered outside of the normal payroll and pay period. Ad-hoc payments represent some form of compensation to an employee that will not be included in their regular paycheck. This payment may include bonuses, reimbursements, incentive payments, and special authorisation payments that are submitted directly through a company’s payroll management system or HR Management System.

Highlights of Payroll and Benefits Overview

• One-time payments to employees only.
• Not a part of the fixed salary structure for payroll and benefits.
• Requires a separate approval workflow outside of the regular payroll process.
• Some payments may be considered taxable based on payment type.
• Payment and benefits are processed using HRMS payroll modules.

Legal Compliance 

All types of ad hoc payments that are made need to be compliant with the following existing laws in India concerning payroll and taxation:

• Statute: Income Tax Act 1961 (taxability to receive bonuses and other incentivised payments)
• Statute: Payment of Wages 1936 (timely payment of wages)
• The company’s policies on how employees should receive compensation & reimbursement.

Classification of the payment type is essential to preventing an individual or company from being in violation of tax or compliance regulations.