Are Service Charges Considered Wages Under the ESIC Act? Seeking Expert Advice

Dear Expert, Service charges recovered from customers by a hotel/restaurant and paid to the employees every month are considered wages under the ESIC Act. Could you please advise on this matter?

Thank you.

You have raised an important legal issue on which there is a Honorable Supreme Court judgment from the year 2007 in Quality Inn Southern Star's case. The copy of said judgment is attached herewith for your information.

However, I am not sure whether the above judgment is still applicable today or whether it has been overruled. Therefore, I suggest that you take up the matter with the appropriate Regional/Sub/Divisional Office of ESIC where your unit is covered. Seek their approval or opinion by indicating that as per their circulars and the Honorable Court decision, no contribution on such "service charges" as collected from customers and paid later on to the staff is payable under the ESI Act, 1948.

Regards.