Payments characterized as 'production incentives' are not classified as 'wages' under the Employees' State Insurance Act when not paid at intervals not exceeding two months.

1Leave granted.

2 The appellant under a "Production Incentive Scheme" pays to its workers production incentive at the rates specified in the Scheme besides normal wages. For the purpose of calculating contributions towards the Employees' State Insurance Fund, the payment of production incentive by the appellant to its workers is not treated by it as "wages" within the meaning of the term as defined in S.2(22) of the Employees' State Insurance Act, 1948 (for short "the Act"). The respondent Employees' State Insurance Corporation (for short "the Corporation") treating the said payment as "wages" issued a demand to the appellant for payment of contributions towards the Employees' State Insurance Fund. This led to filing of an application under S.75 of the Act by the appellant before the Employees' Insurance Court challenging the said demand. The said Court allowed the application and quashed the demand. It held that the payment was made quarterly and was not "wages" under the Act as it did not fall either under the first part of S.2(22) or under the third part thereof. The payment made by the appellant, it was held, did not fall under the first part of the definition of "wages" as there was no agreement between the appellant and its workers for payment of production incentive and also that it did not fall under the third part of the definition as the actual payment was made quarterly which means at intervals exceeding two months.

3The appeal filed by the Corporation against the order of the Employees' Insurance Court was allowed by a learned Single Judge of the High Court holding that the production incentive was calculated on the basis of the extra work done by the workers in each month but to avoid contribution under the Act, the payment was postponed and was made quarterly. The letters patent appeal of the appellant was dismissed and, therefore, the present appeal.

4 The question for decision is whether payments towards production incentive made by the appellant to its workers under the "Production Incentive Scheme" falls within the scope and ambit of "wages" as defined in S.2(22) of the Act and also the effect of payments being made quarterly i.e. at intervals exceeding two months.

5 The Act is a social legislation enacted to provide benefits to employees in case of sickness, maternity and employment injury and to make a provision for certain other matters in relation thereto. Broadly, this is the purpose for which the Corporation has been established under S.3 of the Act. The main source of the Employees' State Insurance Fund is the contributions paid to the Corporation (S.26). The benefits to be provided to insured persons and others are as provided in Chapter V, in particular, S.46 thereof. The words and expressions used but not defined in the Act and defined in the Industrial Disputes Act, 1947 , are to have the meanings respectively assigned to them in the Industrial Disputes Act. Undoubtedly, any provision of which two interpretations may be possible would deserve such construction as would be beneficial to the working class but, at the same time, we cannot give a go by to the plain language of a provision.

6 Under the first part of S.2(22), all the remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled would be "wages". Under this part neither the actual payment nor when the payment is made is of any relevance last part of S.2(22) relates to payment of additional remuneration. The additional remuneration, if any, paid at intervals not exceeding two months and not falling in (a) to (d) would also be wages within the meaning of the term as defined. Under this part of the definition, there has to be payment and not only payability and the payment has to be at intervals not exceeding two months.

7 The High Court while coming to the conclusion that the payment of production incentive to its workers by the appellant is "wages" within the meaning of th