Conveyance allowance will not be a ‘wage’ under ESI Act: ESIC

Employees’ State Insurance Corporation
(Minister of Labour & Employment, Govt. of India)
Headquarters
Panchdeep Bhawan, C.I.G. Marg, New Delhi-1.10002
Website : www.esic.nic.in/www.esic.in

No. T-11/13/56/02/2020 Rev.II

Dated: 08.11.2021

To

All AC & RDs/Directors I/c/JD I/c/DD I/c
ROs/SROs, ESI Corporation

Sub: SLP No. 811/2021 in the matter of ESIC V/s M/s. Texmo Industries-regarding

Sir,

I am directed to enclosed herewith a copy of the judgement of the Hon’ble Supreme Court of India, in the above mentioned SLP wherein the Hon’ble Supreme Court has held that the payment of Conveyance Allowance on the fact of present case does not fall under the definition of term “wages” as defined in section 2(22) of the ESI Act.

A dispute arose between M/s Texmo Industries Vs. ESIC on payment of contribution on conveyance allowance. The SRO Coimbatore had issued a demand to the employer for payment of contributions on conveyance allowance paid to the employees. This led to filing of an application u/s 75 of the Act by the employer before the E.I. Court challenging the said demand. The E.I. court gave its verdict against Corporation. Subsequently ESIC filed an appeal before Hon’ble High court which also went against Corporation.

Thereafter an SLP No.811/2021 was filed by Corporation before Hon’ble Supreme court of India, which was listed on 08.03.2021 for final hearing & decision. Hon’ble Supreme court of India dismissed the said SLP file by the Corporation vide its judgement dt.08.03.2021.

As per the judgement of the Hon’ble Supreme court of India and opinion of our learned Advocate, Conveyance Allowance shall not form part of the wages of the employees and the judgement holds good w.e.f. 08/03/2021.

Keeping in view of the above decision, copy of the judgement is circulated for necessary action and strict compliance.

This issues with the approval of the Director General.

Yours faithfully

(MOHIT RAJA)

DY. DIRECTOR (REV.)

Encls: as above

Copy to : Website Content Manager with the request to upload on the website of ESI Corporation.

Read Full Judgement : https://taxguru.in/corporate-law/esi-contributions-payable-conveyance-allowance-sc.html