Case Study: Temporary Covid Incentives Do Not Count as Wages under ESI Act

Case Study: Temporary Covid Incentives Do Not Count as Wages under ESI Act

Case

Ms. Godambari Raturi vs. ESIC & Anr.

Court and Date

Delhi High Court
W.P.(C) 16407/2022 | Date: 08 November 2024
Justice: Hon’ble Mr. Girish Kathpalia

Relevant Law

• Employees’ State Insurance Act, 1948
  • Section 2(22) – Definition of “Wages”

Background

The petitioner, Ms. Godambari Raturi, sought ESI Covid-19 relief after her husband, an insured person under ESIC, passed away during the pandemic. The ESIC denied relief, arguing that the temporary incentive her husband received pushed his wages above ₹21,000, thereby disqualifying him from coverage.

Legal Issue

Whether temporary incentives paid to employees during the Covid-19 pandemic for masks, gloves, and other essential items should be considered part of “wages” under Section 2(22) of the ESI Act.

Key Legal Findings

• Special incentive paid to cover pandemic-related expenses does not qualify as wages under the Act.
• Temporary allowances, even if they cause wages to exceed ₹21,000, do not affect ESI coverage if contributions were duly made.
• The Covid Scheme is a welfare measure, and interpretation must favor affected workers and their families.
• The insured employee’s actual wage was ₹19,585 + ₹2,674 (incentive) – the latter being non-regular and temporary.
• Denying the widow Covid relief due to technical misinterpretation defeats the welfare purpose of the Act.

Judgment

The Court allowed the writ petition and directed ESIC to release all Covid-19 relief benefits to the petitioner within 4 weeks. It emphasized liberal interpretation of welfare schemes during extraordinary circumstances like the pandemic.

Conclusion

The Delhi High Court reinforced that temporary incentives for pandemic-related needs do not disqualify employees from ESIC benefits. Welfare measures must be interpreted broadly, and authorities must not deny claims on technical grounds.

Key Learning

✔️ Temporary pandemic-related payments (e.g., for PPE) are not considered wages under the ESI Act.
✔️ Widows and dependents of Covid-affected employees must receive their entitled benefits.
✔️ Authorities must ensure equitable application of welfare laws, especially during crises.

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