REGIONAL DIRECTOR OF EMPLOYEES Vs. AMALGAMATION

JUDGEMENT

(1.) BOTH the above civil miscellaneous appeals arise out of the orders of the First Additional City Civil Judge, Madras in E.T.O.P. No. 11 of 1976. E.I.O.P. No. 11 of 1976 is a petition filed by Amalgamations Repco Ltd., Madras-60, under section 75 of the Employees' State Insurance Act, 1948, for declaration that the payments made under the incentive scheme and the night shift allowance payable to the workmen of the factory are not wages within the meaning of section 2(22) of the said Act. The case of the management is as follows:-

(2.) THE Company pays night shift allowance at the rate of 70 paise per shift, as an inducement to the workers, so as to keep themselves awake and with a view to reimburse them for the expenses that they might incur by way of tea, snacks, etc., during night hours. Apart from this, the company has introduced incentive bonus to the workers for higher production over and above the norms set out by the management. THE incentive bonus is paid on the principle that the workmen, should be given a share in the profits of productivity. One of the features of the incentive bonus scheme is that the company has no obligation to provide work to workmen to enable them to earn incentive and the incentive scheme can be withdrawn at any time. THE incentive scheme is not one of the terms of the appointment and it has been introduced voluntarily by the management. THE workers are not entitled to incentive payment as a matter of right, as they are expected to give optimum level of production during the normal working hours for the basic wages and dearness allowance paid to them in terms of the letter of appointment. THE company has not been treating the incentive payments, namely, night shift allowance and production incentive bonus, as wages for the purpose of calculating the Employees' State Insurance contribution. THE Employees' State Insurance Corporation also did not treat the night shift allowance and production incentive bonus as wages till March, 1974. Surprisingly, on 12th September, 1974, the Employees' State Insurance Corporation wrote to the Company that, for the period from st October, 1971 to 30th June, 1973, there were arrears to the tune of Rs. 1,001, towards contribution due to non-inclusion of the payments made under the heads of produc-lion incentive bonus and night shift allowance. THE case of the Employees' State Insurance Corporation is that the aforesaid payments constitute wages under sub-section (22) of section 2 of the Employees' State Insurance Act and on that basis the company was asked to submit revised returns. THE company sent a reply on 17th October, 1974, pointing out the reasons as to why the incentive bonus and night shift allowance would not constitute wages within the meaning of the abovesaid Act. THE Employees' State Insurance Corporation, by its letter, dated 12th December, 1974, reiterated its stand that the incentive bonus would be wages. THE company also once again conveyed to the Employees' State Insurance Corporation, by its letter, dated 18th July, 1975, that both the abovesaid payments will not cojne under the definition of 'wages' as per section 2(22) of the Employees' State Insurance Act. THE Employees' State Insurance Corporation refused to accept the explanation of the company and by its notice, dated 18th September, 1975, determined the arrears of Employees' State Insurance contribution treating the abovesaid payments as wages which resulted in the filing of E.I.O.P. No. 11 of 1976 on the file of the City Civil Court, Madras, by the company. THE learned First Additional City Civil Judge after considering the pleadings of the both sides framed following issues:-

(3.) THE points for determination in both the appeals are as follows:-