ESIC can’t recover claims from Shriram Chits on incentives paid to staff, says Labour Court

The Employees Insurance Court (Principal Labour Court) has ruled that the incentives paid by Shriram Chits Tamilnadu Private Limited to its staff, do not fall within the meaning of definition of “wages” as per the Employees’ State Insurance Act.

It also granted a permanent injunction restraining the Employees’ State Insurance Corporation (ESIC) Limited from claiming any amount towards contribution from the company in respect to the incentives paid to staff.

In 2008, ESIC had issued an order directing Shriram Chits Tamilnadu Private Limited to pay about ₹6.13 lakh as contribution towards the ₹94.08 lakh annual incentives paid to the staff. Against this, the company moved the Labour Court.

The court noted that for incentive to be treated as beyond the scope of the ESI Act, it should be paid at intervals exceeding two months and it also should not be paid on the basis of express or implied terms of the employment contract.

The company has satisfied these conditions, it added.

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