Rajendra Babu, J. - (1.) Leave granted.
(2.) Respondent Nos. 3 to 23 were workmen in the establishment of the appellant. They filed applications under the Payment of Gratuity Act, 1972 [hereinafter referred to as 'the Act'] for a direction to pay balance of gratuity by the appellant for a period of service rendered by them. Respondents Nos. 3 to 23 retired from the establishment of the appellant and they were paid gratuity calculating basic wages and dearness allowance only. They claimed that they were also paid incentive wages as per Section 4(2) of the Act. The appellant contended that they were governed by settlements and awards regarding wages and other service conditions, which had clearly set out that incentive earnings should not be reckoned as wages for the purpose of provident fund, bonus, gratuity, ESI, overtime, etc. They also submitted that the incentive earnings would not partake the character of wages for the purpose of gratuity under the provisions of the Act and that the respondents had already received gratuity on the basis of last drawn basic wages and dearness allowance and, therefore, sought for dismissal of the applications. The Controlling Authority held as follows : "For the incentive payment, the norms fixed were in pieces, per jar, per unit, per truck per paid, per trap per cistern, per hands, etc. Therefore, incentive payment was made on the basis of pieces or number of items produced."
(3.) On that basis, the Controlling Authority concluded that Section 4(2) of the Act was attracted as it deals with the piece rate wages but wages paid for any overtime work should not be taken into account as wages and that the appellant had paid incentive wages to their workers on the basis of pieces produced by the workers. It was further held that the incentive wages were actually calculated on the basis of pieces and also the rate was fixed per piece or unit, etc. In those circumstance, the Controlling Authority held that incentive wages were actually paid piece rate wages. Although the Controlling Authority agreed with the contention that wages would mean basic wage and dearness allowance, he stated that the incentive wages paid on the basis of piece rates and amount fixed per piece have to be treated as piece rate wages in terms of Section 4(2) of the Act and, therefore, allowed the appellants.;