VERY IMPORTANT POINT
Both the remuneration received during the working hours and overtime constitute a composite wages and thereby the overtime wages paid to an employee are wages within the meaning of Section 2(22) of the Employees State Insurance Act, 1948, concomitantly, the employer is enjoined to pay the contribution under the Act.

Headnote:LABOUR LAW-Employees State Insurance Act, 1948-Section 2(22)-Wages-Definition-Whether overtime wages paid to an employee are wages within the meaning of Section 2(22)?-(Yes)-Whether absence of stipulation for payment of overtime wages in original contract of employment, would take away such remuneration paid towards overtime work from definition of word wages ?-(No).
       Held : Whatever remuneration, paid or payable for overtime work, forms wages under an implied term of the contract. The object thereby is clear that the overtime work done by the employee is an implied contract to do overtime and the remuneration paid therefor does form part of the wages under Section 2(22). Concomitantly, the employer is enjoined to pay the contribution under the Act and should be required to be complied with. (Para 5)
        Further held : When the admitted position is that an employee has done the overtime work and received or is due to receive remuneration towards the work done for his rendering service, necessarily, it is a wage paid or payable by virtue of the implied contract. The contract of employment is entered into only at the initial entry into the service. In the course of the employment, as and when the employer finds the need to have work done expeditiously, in addition to the normal work during the course of the working hours, the employer offers to the employee to do overtime work after the working hours. When an employee does overtime work, it amounts to acceptance of the same. There emerges concluded implied contract between the employer and employee. There is no need to write on each occasion separately on the letter of appointment. It becomes integral part of original or revised contract of employment from time to time. The employer is obligated to pay wages when the employee does work. This will be, in addition to payment of the wages he receives for normal work. In other words, both the remuneration received during the working hours and overtime constitute a composite wages and thereby it is a wage within the meaning of Section 2(22) of the Act. (Para 5)

ORDER

These appeals are by certificate granted by the Division Bench of the Andhra Pradesh High Court under Article 133 of the Constitution. The question of law of public importance is : whether the overtime wages paid to an employee by the appellants are "wages" within the meaning of Section 2(22) of the Employees State Insurance Act, 1948 (for short, the Act ). It is not necessary to record the facts in all these cases. Suffice it to state that the facts in C.A. No. 2784/80 are sufficient for disposal of the common controversy. Admittedly, the appellants have taken overtime work from their existing employees. The employees had done work during the stipulated working time and thereafter they were asked to perform overtime work which they did and accordingly, the overtime rate of wages was paid in terms of the agreement between the appellants and the workmen.

2. Therefore, the question has arisen : whether absence of stipulation for payment of the overtime wages in the original contract of employment, would take away such remuneration paid towards the overtime work from the definition of the word wages within the meaning of Section 2(22) of the Act. The said section reads as under :

" 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 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;

(d) any gratuity payable on discharge ;

3. Shri Kailash Vasdev, learned counsel for the appellants in two appeals and Shri Sampath, learned counsel in another appeal representing Agarwal Industries, raised two-fold contention. According to Shri Kailash Vasdev, the Legislature having taken care to exclude the overtime wages from the purview of the definition of "employee" within the meaning of Section 2(9) of the Act and equally having defined the "wages" under Section 2(22) of the Act, necessary intendment therefrom is that the Legislature intended to exclude overtime wages from the remuneration paid for overtime work done by the employer. Unless it is part of contract of appointment, it is outside the definition of "wages", Admittedly, there is no contract between the appellants and the workmen to pay the overtime wages. It is not obligatory for the appellants to offer overtime wages not is it obligatory for the employees to work overtime. In the absence of such mutual obligations under a contract, it cannot be considered to be "wages" within the meaning of Section 2(22) of the Act. Shri Sampath further elaborated spinning that in the light of statutory operation, unless there is any agreement in writing, it cannot be construed to be an implied contract. Since it is not obligatory for the employees to work, remuneration paid towards overtime work amounts to mutual payment not as part of wages but as remuneration for services rendered outside the contract of employment of the employees. Therefore, it will not come within additional remuneration, if any, paid at intervals not exceeding two months within the meaning of Section 2(22) of the Act. In support thereof, both the learned counsel have placed strong reliance on the judgments of the Calcutta High Court in M/s. Hindustan Motors Ltd. v. E.S.I. Corporation & Ors.1 and Karnataka High Court in Hind Art Press, Mangalore v. ESI Corporation & Anr.2.

4. The question is : whether the view taken by the said High Courts is correct in law and whe

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1996 Supreme(SC) 1872

Cases Referred (2)