United Brewaries Ltd. vs E.S.I. Corporation

K.A. Abdul Gafoor, J.—It is an admitted case that incentive had been paid to the employees of the appellant. But it was not counted for the contribution payable to the Employees State Insurance. A demand was made. Thereupon a petition was filed by the appellant before the E.I. Court under Sections 75, 76, 77 of the Employees State Insurance Act seeking a relief that incentive paid does not come within the wages to attract contribution. The court below did not find that contention sustainable and dismissed the application. The court below found that the incentive paid was a part of the wages paid or payable to the workmen concerned. It is in the above background this appeal has been filed.

The only point is whether the incentive paid in terms of the scheme evolved by the appellant in tune with Clause II of settlement Ext. P8 forms part of the wages.

It is an admitted fact that there was a long term conciliation settlement. The payment made to the workmen once in three months is in terms of the aforesaid settlement. Settlement forms, it is an admitted fact, contract of employment. The benefit of bonus/incentive is thus a payment made in terms of contract of employment. But for the settlement this amount would not have been paid to the workmen.

Now we will examine what is the definition of the wages as per Section 2(22) of the said Act, which reads as follows:

" ''Wages'' means all remuneration paid or payable in cash to an employee., if the terms of the contract of employment, express or implied, were fulfilled and includes (any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and) other additional remuneration, if any (paid at intervals not exceeding two months)......"

If the payment is arising out of contract of employment the periodicity of payment is irrelevant. On the other hand if the payment is made as an additional remuneration necessarily the periodicity has some relevance, to consider whether it forms part of wages.

As already mentioned above payment emanates from the provisions contained in the terms of settlement. Necessarily payment is arising out of contract of employment. Then the periodicity of such payment is irrelevant. It becomes wages whatever be the periodicity of payment. As thus the bonus/incentive is being paid in terms of the settlement which forms part of contract of employment, necessarily it is not an additional remuneration for which periodicity is a relevant factor as per the definition of wages extracted above. On that ground alone the impugned judgment has to be sustained.

Even otherwise it has to be sustained because going by the settlement incentive/ bonus will be payable on the basis of performance or production for every month. Therefore, it is something payable for the work done on monthly basis, even though payment is stipulated as one in three months. On that ground also no case is revealed for interference.

A decision reported in M/s. Whirlpool of India Ltd. Vs. Employees'' State Insurance Corporation, has been cited before us to contend that the incentive does not form part of the wages. It was held so in that case. But that was an incentive paid on the basis of a scheme voluntarily promulgated by the employer and not arising out of a contract of employment or a settlement. Therefore it was an additional remuneration where periodicity is a relevant factor in terms of the definition of the wages as extracted above. Therefore, that dictum does not apply to the facts of this case.

Appeal is disposed of.