Directors could come under ESI Act

Directors of a company who are receiving remuneration for the discharge of duties entrusted to them come within the meaning of “employee” as defined in the Employees' State Insurance Act, the Supreme Court ruled last week in its judgment in the case, ESI Corporation vs Venus Alloy Ltd. Allowing the appeal of the corporation, it indicated that even the managing director of a company could be covered by the Act depending upon his work and remuneration. The ESI court and the Madhya Pradesh High Court had ruled against the corporation’s demand for contribution from the firm, stating that directors are not employees. In this case, directors of the firm were receiving ~3,000 per month for the discharge of duties assigned to them. The corporation successfully argued that the amount given to them was ‘wage’ as defined in the ESI Act and the high court judgment was set aside.