Service charges are not wages under ESI law when they are not payable under the employment contract.

Service charges collected by a hotel management and distributed to employees were held not to constitute "wages" under the Employees' State Insurance Act, 1948, because they were not remuneration payable under any express or implied term of employment and did not arise under the contract of employment. The statutory definition of wages, covering cash remuneration and additional remuneration paid at intervals not exceeding two months, was read as excluding such amounts. The Court also relied on the Corporation's memorandum clarifying that service charges do not form part of wages. The contribution demand based on those service charges could not stand, and the orders sustaining it were set aside.

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Issues: Whether service charges collected by a hotel management and distributed among employees constitute "wages" under the Employees' State Insurance Act, 1948.

Analysis: The statutory definition of wages covers remuneration paid or payable in cash and includes additional remuneration paid at intervals not exceeding two months, but excludes sums not arising under the contract of employment. The service charges in question were collected by the management, distributed periodically, and were not payments made to employees under any express or implied term of employment. The Court also relied on the Corporation's memorandum clarifying that such service charges do not form part of wages, and accepted the view that they were outside the wage definition.

Conclusion: Service charges of the kind involved do not constitute wages under Section 2(22) of the Employees' State Insurance Act, 1948, and the demand for contribution on that basis could not stand.

Final Conclusion: The orders sustaining contribution on service charges were set aside, and the appeal succeeded.

Ratio Decidendi: Amounts collected by an employer as service charges and distributed to employees, where they are not payable under the contract of employment, are not "wages" for the purposes of the Employees' State Insurance Act, 1948.

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