Remunerated directors can count as employees for ESI coverage when they work for the company and receive pay.

A remunerated director may hold a dual capacity and, where remuneration is paid for work done for the company, is not excluded from the definition of employee merely because of the office held. Applying section 2(9) of the Employees' State Insurance Act, 1948, the remunerated directors had to be counted with other workmen when determining whether the statutory employee threshold for coverage was met. On that basis, the directors were treated as employees and the establishment fell within the Act's coverage.

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Issues: Whether remunerated directors of a company are to be treated as employees for the purpose of counting the number of employees and bringing the establishment within the coverage of the Employees' State Insurance Act, 1948.

Analysis: The definition of employee under section 2(9) was applied in the light of the settled position that a managing director or director may hold a dual capacity. Where a director receives remuneration for work done for the company, the director is not excluded from the concept of employee merely because of the office held. On that basis, the remunerated directors were required to be counted along with the other workmen for determining whether the statutory threshold for coverage was satisfied.

Conclusion: The remunerated directors were employees for purposes of the Act and the establishment was covered under the Employees' State Insurance Act, 1948.

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