- (1.) The question for consideration in this petition for special leave to appeal under Article 136 of the Constitution of India is whether the expression 'wages', defined by Section 2 (22) of the Employees' State Insurance Act, includes 'House Rent Allowance', 'Night Shift Allowance' paid to those employees who are obliged to work in the night shift and the 'Heat, Gas and Dust Allowance' and 'Incentive Allowance' paid by an employer to his employees. Section 2 (22) defines 'wages' as meaning : "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 Dot illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two. months, but does not include (a) any contribution paid by the employer to any pension fund' or provident fund, or under this Act; (b) any travelling allowance or the value of any travelling concession; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (d) any gratuity payable on discharge."
(2.) The Employees' State Insurance Act is a welfare legislation and the definition of 'wages' is designedly wide. Any ambiguous expression is, of course, bound to receive a beneficent construction at our hands too. Now, under the definition, first, whatever remuneration is paid or payable to an employee under the terms of the contract of the employment, express or implied is wages; thus if remuneration is paid in terms of the original contract of employment or in terms of a settlement arrived at between the employer and the employees which by necessary implication becomes part of the contract of employment it is wages; second, whatever payment is made to an employee in respect. of any period of authorised leave, lock-out, strike which is not illegal or lay-off is wages; and third, other additional remuneration, if any, paid at intervals not exceeding two months b also wages; this is unqualified by any requirement that it should. be pursuant to any term of the contract of employment, express or implied. However, 'wages' does not include any contribution paid by the employer to any pension fund or provident fund, of under the Act, any travelling allowance or the value of any travelling concession, any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment and any gratuity payable on discharge, Therefore wages as defined includes remuneration paid or payable under the terms of the contract of employment, express or implied but further extends to other additional remuneration. if any, paid at intervals not exceeding two months, though outside the terms of employment, Thus remuneration paid under the term; of the contract of the employment (express or implied) or otherwise if paid at intervals not exceeding two months is wages. The interposition of the clause 'and includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff' between the first clause, 'all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, was fulfilled' and. the third clause, 'other additional remuneration, if any, paid at intervals not exceeding two months', makes it abundantly clear that while 'remuneration' under the first clause has to be under a contract of employment, express, or implied, 'remuneration' under the third clause need not be under the contract of employment but may be any 'additional remuneration' outside the contract of employment. So, there appears to our mind no reason to exclude 'House Rent Allowance', 'Night Shift Allowance', Incentive Allowance and 'Heat, Gas and Dust Allowance' from the definition of 'wages'. A Full Bench of the Karnataka High Court in N. G. E. F. Ltd. v. Dy. Regional Director, E. S. I. C., Bangalore, 1980 Lab IC 431 considering the question at some length held that the amount paid by way of incentive under the scheme of settlement entered into between the Management and its workmen was wages within. the meaning of Section 2 (22) of Employees' State Insurance Act. It was observed by the Full Bench of the Karnataka High Court as follows (at p. 436) :- "It is true that the word 'remuneration' is found both in the first and second parts of the definition. But the condition attached to such payment in the first part cannot legitimately be extended to the second part. The other 'additional remuneration' referred to in the second part of the definition is only qualified by the condition attached thereto (that is, paid at intervals not exceeding two months). That was also the view taken by a Full Bench of the Andhra Pradesh High Court in Employees' State Insurance Corpn., Hyderabad v. Andhra Pradesh Paper Mills Ltd. (AIR 1978 Andh Pra 18) and also the Bombay High Court in M/s. Mahalaxmi Glass Works Pvt. Ltd. v. Employees State Insurance Corpn. (1976 Lab IC 514). But this aspect of the matter has been completely overlooked by this Court in Kirloskar's case."
(3.) In Employees' State Insurance Corporation, Hyderabad v. Andhra Pradesh Paper Mills Ltd., Rajahmundry, 1978 Lab IC 19 : (AIR 1978 Andh Pra 18), a Full Bench (Divan, C. J., Raghuvir and Gangadhara Rao, JJ.) of the Andhra Pradesh High Court held that incentive bonus paid to an employee (which the Court. on the facts of the case, found was not remuneration in terms of the contract of employment, express or implied) fell within the third part of the definition of 'wages! that is 'additional remuneration if any, paid at intervals not exceeding two months'. The Full Bench said (para 19) :- "The word other' appearing at the commencement of the third part of the definition of wages under Section 2 (22) indicates that it must be remuneration or additional remuneration other than the remuneration which is referred to in the earlier part of the definition viz., all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and incentive bonus in the present scheme is certainly additional remuneration. It must be emphasized at this stage that under the third part of the definition of 'wages' it is actual factum of payment which counts because the word used is 'paid' as distinguished from 'paid or payable'. The moment you get any additional remuneration other than the remuneration payable under the contract of employment and if this additional remuneration is paid at intervals not exceeding two months, it becomes wages by virtue of the third part of the definition of 'wages'.";