Whether the allowances paid to the employees are subject to E. S1. Contribution deduction?

The allowances have been excluded by section 2(22) (b) and (c) of the E.S.I. Act. In a case it has been held that the cycle allowance given to the employees is nothing but traveling concession and the value of cycle allowance falls in exception (b) of section 2(22) of the Act. Similarly, the uniform allowance paid by the employer cannot be added to wages for calculating contribution under the Act All the same the payment of milk, tea and egg allowances has also been excluded from the purview of the wages.

Payment of lnam paid by the employer in pursuance of an agreement will be 'wages' notwithstanding that agreement was not a term of the original contract. In a case before the Supreme Court, it has been held that the term 'wages' includes House Rent Allowances; Heat Gas and Dust Allowance as well as Incentive Allowance.

1.Hyderabad Asbsestos Cement Product Ltd., Ballabgarh vs. Regional Director, ESI. Corpn., Chandigarh. 1982 Lab. IC 88 (Punjab) (NOC); Employees State Insurance Corpn. Chandigarh vs. Gedore Tools (India) P.Ltd. Faridabad, 1982 Lab. IC87 (Punjab) NOC; Employees State Insurance Corpn. NewDelhi vs. Pratap Names Labels Factory. 1982 Lab.IC41 (Delhi) (NOC)

2.Employees' State lnsurance Corp. vs. Enfield India, 1995 LLR 81 (Madras High Court).

3.Harihar Polyfibres vs. Regional Director, ESI Corpn. AIR 1984 SC 1680; 1984 Lab. IC 1568; 1984 (65) FJR 199.


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