Calcutta High Court
West Bengal Swarojgar Corporatioin … vs Central Board Of Trustees Of Epfo And Ors on 23 July, 2026
2026:CHC-OS:321
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
WPO/1222/2023
WEST BENGAL SWAROJGAR CORPORATIOIN LIMITED
-VERSUS-
CENTRAL BOARD OF TRUSTEES OF EPFO AND ORS.
Present :
The Hon‟ble Justice Shampa Dutt (Paul)
For the Petitioner : Mr. Soumya Majumder, Sr. Adv.
Mr. Sudarsan Roy, Adv.
For the Respondent Nos.1 & 2 : Mr. Shiv Chandra Prasad, Adv.
For the Respondent Nos.4 & 5 : Mr. Pratik Majumdar, Adv.
Mr. Snehasish Dey, Adv.
For the State : Mr. Asim Kumar Ganguly, Adv.
Ms. Srijani Mukherjee, Adv.
Hearing concluded on : 25.06.2026
Delivered on : 23.07.2026
SHAMPA DUTT (PAUL), J. :-
1. The writ application has been preferred praying for direction upon the
respondents not to give effect to the order dated 17.02.2023 passed by
the respondent no.2 under para 26B of the EPF Scheme, 1952.
2. By an impugned order dated 17.02.2023, the Regional Provident Fund
Commissioner being the respondent no.2 herein, relying upon the
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judgment of the Hon‟ble Gujarat High Court passed in Satish Plastic vs.
Regional Provident Fund Commissioner reported in (1982) 4 FLR
2007, held as follows:-
“Applying the above order to the present situation I try to decipher the
answer to these questions in the present case-
Was he doing the work for monetary payment?
A- Indeed, it is an admitted fact in the instant case.
Was the work done by him as the work of the establishment
or had he nexus with such work.
A. The work done by Prakalpa Sahayaks is an integral part
of the work of the establishment WBSCL.
Was the payment made to the person for the physical and
mental efforts in such connection with such work.
A- Indeed, the work of motivators in sanction/disbursement
of loans and other activities required good amount of
physical and mental work
Was the work such that it had to be done as directed by the
establishment or under its supervision and control to the
extent that supervision and control are possible having
regard to the specialized nature of work or skill needed for
its performance?
A- The fixing of targets and assignment of particular work
as enumerated in paragraph 14 of the instant order very
well answers the above question.
Was the work of such nature and character that ordinarily a
master servant could exist and but for the agreement styling
it as a contract, common practice and common sense would
suggest a master servant bond?
A- The assignment of other activities as mentioned in the
paragraph 14 of this order goes on to suggest that there
3
2026:CHC-OS:321indeed was a master-servant relationship between the two,
otherwise assignment of these other duties by the employer
would never be complied with by the Sahayaks
Was the relation indicative of master servant status in
substance having regard to economic realities, irrespective
of the nomenclature devised by parties?
A- The economic realities in this case are indicative since
the Sahayaks belong to the lower economic strata of the
society whereas the employer is a body corporate being
funded by the Government of West Bengal.
Was he required to do the work personally without the
liberty to get it done through someone else?
A- The fact that Prakalpa Sahayaks are engaged after an
interview process, the records showed that on 08/10/2007,
for example, an Interview notice was given to Smt. Reena
Chakraborty who applied to be engaged as a
motivator/Prakalpa Sahayak Therefore it can be safely said
that motivators are specifically engaged through due
process and the work they perform is designated upon the
people who clear the interview only and no one elseFrom the above discussion it is clear that the present case satisfies the
test of an employer-employee relationship as codified in the above said
Judgment.”
3. The respondent no.2 finally decided that Prakalpa Sahayaks as defined
by the WBSCL (the establishment) have to be treated as employees under
the EPF & MP Act, 1952 and order the establishment to enroll them as
EPF members since their respective Date of joining. The said task needs
to be completed within 60 days of the date of receipt of the order failing
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which appropriate action deemed fit under law as assessment of dues
under Section 7A of the Act may be taken against the establishment.
4. The petitioner‟s case herein is that the petitioner/company is a state
Government owned Corporation under the direct control of the
Department of Self-Help Group & Self Employment, Government of West
Bengal. It is financially, functionally, and administratively controlled by
the Government of West Bengal. The Petitioner company only
implements the Directive Principles of State Policy and works for the
benefit and benevolence of the society at large through implementation of
various schemes, of the State Government in such capacity and only acts
as a nodal agency of the Government for the benefit of the people of West
Bengal. By a notification no. 222-SH/2P-49/07 dated 23/05/2007, the
Government of West Bengal had conceived of engagement of
“Motivators” to assist prospective entrepreneurs in the State of West
Bengal to avail themselves of various schemes, provided guidance
and for appropriate implementation thereto. Such ad hoc engagement
of “Motivators” is renewable from time to time to generate self-
employment of unemployed youth. The Motivators are to be paid
performance relating incentives to be decided by the Department of
Self-Help Group& Self-Employment.
5. It is stated that by making newspaper publication, Motivators are
engaged and the various schemes of the Government, which encourage
self-employment of unemployed youth are made known to the public at
large and implemented. The petitioner company does not carry out
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any independent business, but it is only a nodal agency of the
Government of West Bengal. In respect of the Motivators, incentive and
T.A. bills are raised by the Motivators on the petitioner company which
are forwarded by the petitioner company to the Government of West
Bengal in the Administrative Department in consideration whereof, the
Government releases fund to the petitioner company.
6. The Motivators do not work for or in connection with the work of the
establishment in relation to the petitioner company, but they are only
acting to motivate unemployed youth to entrepreneurship with
Government aid/support/subsidy. Towards this motivation, the
Government pays certain amount of incentive to the Motivators
through the petitioner company.
7. The employees of the petitioner company are governed by the provisions
of the EPF&MP Act, 1952. However, there is no notification, so as to
cover these type of activity of the petitioner establishment under the
provisions of the said Act of 1952. The Motivators are actually
Prakalpa Sahayaks. They had initiated action against the Government of
West Bengal for upwardly revision and enhancement of the Travelling
Allowance, which had been turned down by the Finance Department
despite recommendation of the Department of Self-Help Group& Self-
Employment.
8. Some of the Prakalpa Sahayaks filed a Writ Petition in the Hon’ble High
Court at Calcutta for permanence and salaried employment and for equal
pay for equal work like Government employees. The same was turned
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down by the Hon’ble Court vide Judgment and order dated
29.09.2021 in WPA 11630 of 2021, wherefrom the nature of work and
activities of the Prakalpa Sahayaks will further appear.
9. The Provident Fund Authorities initiated a proceeding by a letter dated
21.10.2021 regarding non-extension of provident fund benefits to the
Prakalpa Sahayaks on the basis of a purported complaint made by one of
the Prakalpa Sahayaks on 07.09.2021. The proceeding initiated by the
Provident Fund Authorities was in terms of the provisions of para 26B of
the EPF Scheme, 1952, and the petitioner is participating on the basis
that the Regional Provident Fund Commissioner was only exercising the
jurisdiction for resolution of doubt and nothing beyond that.
10. Finally, the PF authority passed the impugned order dated
17.02.2023 which has been challenged in the present writ application on
the ground that the said impugned order is bad in law and that the
respondent no. 2 failed to appreciate that Prakalpa Sahayaks are not
employees within the meaning of Section 2(f) of the EPF & MP Act.
1952 made with the corresponding provisions of the EPF Scheme,
1952. It is further stated that the respondent no. 2 failed to appreciate
that merely receiving money from the Government through a nodal
agency does not make a person of the society to be employed by the
petitioner company.
11. The petitioner further reiterates that the respondent no.2 did not
appreciate the fact that the work done by the Prakalpa Sahayaks is not
the integral work of the petitioner establishment and that the work
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performed by the Prakalpa Sahayaks against incentive was only
towards fulfillment of Directive Principles of State Policies and not
for any business or any activity of the petitioner Company and further
that the respondent no.2 failed to appreciate that the assignment of work
was only for the purpose of implementing Government schemes and no
amount of business is earned by the petitioner company through
implementation of Government schemes.
12. It is submitted that the finding of the authority concerned, that
there exist a Master-Servant relationship or an Employer-Employee
relationship is also bad in law. It is stated that the Prakalpa Sahayaks
are equivalent to LIC agents which the authority concerned failed to
appreciate. It is further stated that the motivators/ Prakalpa Sahayaks
are free to carry out their individual trade, profession, avocation,
business or otherwise.
13. On filing the affidavit-in-opposition, the respondent nos.4 and
5 herein have stated that the said respondents were appointed through
interview and through issuance of appointment letters and that the
engagement of the motivators is entirely in terms of Government
Notifications and the Corporation only goes for such recruitment process
when they are in need of such personnel. It is, thus, stated this proves
the said motivators perform their duties in connection with the work of
the petitioner corporation. It is further stated that the motivators
receive remuneration in the form of incentive based on their
performance for the duties.
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14. It is further stated that they are the employees of the
petitioner/Corporation who are reimbursed for the duties they
perform after verification of performance. This proves that the
Corporation has full control and authority over motivators. It is, thus,
stated that this proves the Master-Servant, Employer-Employee
relationship and that they clearly fall within the definition of “employee”
under Section 2(f) of the Act and, as such, are eligible for provident fund
membership even if he/she is engaged for one day in connection with the
work of the establishment with effect from 01.11.1990 in terms of
Notification G.S.R. 689 dated 19.10.1990. The said respondents
further rely upon the provisions of Section 2(b) of the Act which
defines „basic wages‟ and submits that the reimbursement,
remuneration, incentive received by them is covered under the term
“basic wages.”
15. In reply to the said affidavit-in-opposition filed by the respondent
nos.4 and 5, the petitioner has denied the entire case of the said
respondents as stated therein and has reiterated its case as made out in
the writ application.
16. The petitioner reiterates that the engagement of the respondent
nos.4 and 5 is purely temporary in nature and confers no right to claim
regular employment. It is stated that the said motivators are entitled
only to performance-based incentives, and not to any fixed wages or
salary or employment benefits. “Motivators” is not a sanctioned
created post. The motivator has not been appointed, but engaged
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for projects of Government. It is stated that motivators are purely
engaged on incentive basis and could be terminated at any time without
assigning any reason whatsoever and the engagement is subject to
renewal from time to time at the discretion of the society. It is further
stated by the petitioner that in clause 11 of Notification No. 222-SH/2P-
49/07 dated 23.05.2007 it is clearly mentioned the description of
engagement of Motivator i.e. “such engagement shall not entitle the
Motivators to any claim / right for any kind of Employment under the
said Society / State Government in any manner whatsoever”.
17. The letter of engagement of the Prakalpa Sahayaks formerly
known as Motivators are not their contract of employment, as such
any incentive earned in accordance with their performance with the
terms of the letter of engagement for their performance in motivating the
youth is not same as ‘Basic Wages’ defined under Section 2(b) of the
EPF & MP Act.
18. The motivators do not satisfy the definition of “Employees”. It is
denied that the Motivators are engaged under certain terms and
conditions with emoluments earned for duties or that the Petitioner
exercises high degree of control over the Motivators.
19. They don’t receive remuneration for service rendered to the
petitioner establishment. In fact the added respondent has wrongfully
used remuneration with reimbursement. It is further stated that Neither
the Notification nor the interview process governing the engagement of
Motivators specifies or defines their status as “employee” under Section
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2(f) of the Employees’ Provident Funds and Miscellaneous Provisions Act,
1952. There is no indication that such engagement would amount to
regular employment entitling the individuals to statutory benefits
under the Act. It is also stated that individuals engaged as Prakalpa
Sahayaks do not satisfy the essential criteria laid down under the EPF
and MP Act, 1952, to qualify as “employees” within the meaning of
Section 2(f) thereof.
20. The respondent nos.1 and 2 being the provident fund authority
herein, in their affidavit-in-opposition have supported the case of the
respondent nos.4 and 5 and have stated that the establishment is
covered under the activity of companies offering life insurance, annuity
etc. and so they are the employer.
21. It is further stated by the respondent nos.1 and 2 that the
motivators are remunerated in the form of incentive/TA/Bonus based on
their performance work which is core to the functioning of the
establishment. It is also stated that the instant proceeding under
Section 26B were neither meant for granting any government
employment to the Prakalpa Sahayaks nor for any permanent salaried
employment with necessary pay structure. It is a fact that deduction
and remittance of provident fund dues do not require any permanent
salaried/government employment. The respondent/PF authority further
states that the engagement of the motivators is entirely in terms of
Government Notification and the Corporation only goes for such
recruitment process when they are in need of that particular service.
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Thus it may be said that the duties performed by the
Motivators/Prakalpa Sahayaks are in connection with the work of the
Corporation and there are various level of control under the arms of the
Government of West Bengal.
22. It is also submitted that the engaged Motivators by West Bengal
Swarojgar Corporation Limited very much comes under the definition of
“employee” as per Section2(f) of the Employees’ Provident fund &
Miscellaneous Provisions Act, 1952 (herein after referred as the Act). The
Act does not classify the employees’ as temporary/permanent and being
an employee by virtue of provision under Section 2(f) read with para 2(f)
of Employees’ Provident Fund Scheme, 1952 (herein after referred to as
the Scheme) is eligible for PF membership even if he/she is engaged for
I(one) day even, in connection with the work of the establishment with
effect from 01.11.1990 in terms of Notification No.G.S.R. 689 dated
19.10.1990.
23. It is further stated that the above argument is to be read with
Section 2(b) of the Act, defining “basic wages” specifically which
states that ………… All emoluments which are earned by an employee
while on the duty or (on leave or on holidays with wages in either
case) in accordance with the terms of the contract of employment.
24. Therefore, in this instant case the engagement of the motivators
are on certain terms and conditions (as specified under Notification
No.222-SWH/2P-49 dated 23.05.2007), as also evident from their letter
of engagement and the emoluments they earn for rendering their duties,
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constitutes their wages whatsoever, the nomenclature is in use in lieu of
the term of “wages,” i.e. incentive and the establishment has the full
control and authority over the activities of the motivators, being their
employer. Further, the corporation exercises a high degree of control over
the Sahayaks as various orders are given to the Prakalpa Sahayaks from
the arms of the Government of West Bengal.
25. Thus the contention of the establishment that the Prakalpa
Sahayaks/Motivators are not employees, they act as good as agents of
LIC who earn incentive/TA/Bonus on performance basis does not defend
the true spirit of legislation and also should not be a constraint in
application of the statute.
26. In the affidavit-in-reply filed by the petitioner to the affidavit-in-
opposition of the respondent nos.1 and 2, the petitioner has stated that
the establishment cannot be covered under the Schedule to the Act or
under the EPF Scheme, 1952 referred notifications. And, as such, it is
stated that the Prakalpa Sahayaks are not employees within the meaning
of Section 2(f) of the EPF & MP Act, 1952. They are not employed by the
Petitioner establishment for hire or reward in connection with the work of
the establishment, and hence they are not to be treated as employees of
the establishment. There is no relation indicative of master-servant
status in subsistence between the Petitioner and the Prakalpa Sahayaks
having regard to the economic realities.
27. The parties herein have filed their written notes along with
judgments relied upon by them.
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28. On filing the written notes, learned senior counsel Mr. Majumder
appearing for the petitioners, argues that the motivators were engaged
through newspaper advertisement by the Society for Self Employment of
Unemployed Youth, West Bengal; for the purpose of carrying out the
assignment given by the District Self Help Group and Self Employment
Officer/Block Development Officer/Municipal Youth Officer/Borough
Youth Officer from time to time.
29. The engagement letters were not issued by the petitioner company.
The motivators are given incentives and TA bills which they raised on the
petitioner. Petitioner forwards those bills of the motivators to the
Government. Government releases the fund to the petitioner and the
petitioner gives the same to the motivators.
30. The petitioner has relied upon a judgment passed by a Co-ordinate
Bench in WPA No.11630 of 2021 (Atiyar Rahaman Molla & Ors. vs.
The State of West Bengal & Ors.) wherein the co-ordinate Bench has
directed enhancement of the rates of incentive and Travel Allowance (TA)
payable to the petitioners therein being the prokolpo sahayaks, being the
respondent nos.4 and 5 herein.
31. While passing the said judgment, the Court, in the said judgment,
observed as follows:-
“…..that in terms of Government of West Bengal, Department
of Self-Help Group and Self Employment Notification No.222-
SH/2P-49/07 dated 23.05.2007. ‘Motivator’ means a
person or a group of persons or an organization not
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2026:CHC-OS:321being prospective entrepreneur under the schemes and
is engaged as such to motivate and assist the
prospective entrepreneurs to avail of the Scheme,
provide guidance for appropriate implementation of
the project and play decisive role in motivating the
beneficiaries to repay the loan. Engagement of the
applicants, in terms of para 11 of the Notification No.222-
SH/2P-49/07 dated 23.05.2007 are ad hoc and
temporary in nature. The engagement may be renewed
from time to time at the discretion of the Society for Self
Employment of Unemployed Youth (SSEUY). Such
engagement shall not entitle the Motivators to any
claim/right for any kind of employment under the
Society/State manner Government in any whatsoever. The
engagement of Motivators may be terminated at any time
without assigning any reason whatsoever The Motivators
shall be entitled to only performance-related incentive,
as may be decided by the Department of Self Help
Group and Self Employment. These conditions of
engagement were clearly mentioned in the engagement
letters issued by the Society as can be found from a copy of
the engagement letter adduced by the petitioners as
Annexure P-2 to the Writ Petition. The petitioners. accepted
the engagement letter knowing full well that their
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2026:CHC-OS:321engagement was purely ad hoc and temporary in nature.
Secondly, the petitioners, Motivators (Prakalpa
Sahayaks) are paid Performance-based Incentive.
The conditions of engagement of the petitioners
nowhere leave any room of doubt that such
engagement is not at all akin to any Government
Employment, where the employees are paid a fixed
periodical remuneration. The principle of equal pay for
equal work may be said to have applicability in case of
a Government Employee on a fixed remuneration.
However, the petitioners are entitled to incentive,
implying that the better the performance, the better
the incentive (i.e., the earning). It is a quite fair system
but one in which the principle of equal pay for equal
work can never be applicable.”
32. Mr. Majumder keeping in line with the judgment, submits that the
element of “employee” is absent in the present case and, as such, the
impugned order passed by the authorities herein is erroneous and not in
accordance with law.
33. The following judgments have been relied upon by the petitioner:-
i) Satish Plastics vs. Regional Provident Fund
Commissioner (Passed by Gujarat High Court in Civil
Application No.2345 of 1978 dated 06.08.1980)
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ii) Pawan Hans Ltd. & Ors. vs. Aviation Karmachari
Sanghatana & Ors.) (2020) 13 SCC 506;
34. The respondent nos.4 and 5, in their written notes of argument,
have relied upon the Memorandum dated 21.02.2017 bearing No.1093-
F(Y) issued by the Chief Secretary, Finance Department, Govt. of W.B.,
paragraph 3 thereof reads as follows:
“3. It has further been decided that the services of employees of
all such restructured / merged PSUs / Corporations would not
be affected in any way. The employees in such merged or
restructured PSUs /Corporations will redeployed in the
continuing PSUs / Corporation with which the original unit is
merged or detailed in the various offices in the Government
with same terms & conditions of service.”
35. The said respondent nos.4 and 5 have relied upon the following
judgments:-
i) M/s. P. M. Patel and Sons & Ors. vs. Union of India &
Ors. [(1986 )1 SCC 32];
ii) Officer-in-Charge, Sub-Regional Provident Fund Office &
Anr. vs. Godavari Garments Ltd. [ (2019) 8 SCC 149]
particularly paragraphs 9.5, 9.9 and 10 thereof, which reads
as follows:-
“9.5. On the issue where payment is made by piece-rate to
the workers, would they be covered by the definition of
“employee”, this Court in Shining Tailors v. Industrial Tribunal,
held that:
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“5. We have gone through the record and especially
the evidence recorded by the Tribunal. The Tribunal has
committed a glaring error apparent on record that
whenever payment is made by piece-rate, there is no
relationship of master and the servant and that such
relationship can only be as between principal and
principal and therefore, the respondents were independent
contractors. Frankly, we must say that the Tribunal has
not clearly grasped the meaning of what is the piece-rate.
If every piece-rated workman is an independent contractor,
lakhs and lakhs of workmen in various industries where
payment is correlated to production would be carved out of
the expression “workman” as defined in the Industrial
Disputes Act. In the past the test to determine the
relationship of employer and the workman was the test of
control and not the method of payment. Piece-rate payment
meaning thereby payment correlated to production is a
well-recognised mode of payment to industrial workmen.
In fact, wherever possible that method of payment has to
be encouraged so that there is utmost sincerity, efficiency
and single-minded devotion to increase production which
would be beneficial both to the employer, the workmen
and the nation at large. But the test employed in the
past was one of determining the degree of control
that the employer wielded over the workmen.
However, in the identical situation in Silver Jubilee
Tailoring House v. Chief Inspector of Shops &
Establishments³ Mathew, J. speaking for the Court
observed that the control idea was more suited to the
agricultural society prior to Industrial Revolution and
during the last two decades the emphasis in the field is
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strongly upon the question of control. It was further
observed that a search for a formula in the nature of a
single test will not serve the useful purpose, and all
factors that have been referred to in the cases on
topics, should be considered to tell a contract of
service. Approaching the matter from this angle, the
Court observed that the employer’s right to reject the
end product if it does not conform to the instructions
of the employer speaks for the element of control
and supervision. So also the right of removal of the
workman or not to give the work has the element of
control and supervision. If these aspects are considered
decisive, they are amply satisfied in the facts of this case.
The Tribunal ignored the well-laid test in law and
completely misdirected itself by showing that piece-rate
itself indicates a relationship of independent contractor
and error apparent on the record disclosing a total lack of
knowledge of the method of payment in various
occupations in different industries. The right of rejection
coupled with the right to refuse work would
certainly establish master-servant relationship and
both these tests are amply satisfied in the facts of
this case. Viewed from this angle, the respondents were
the workmen of the employer and the preliminary objection
therefore, raised on behalf of the appellant employer was
untenable and ought to have been overruled and we
hereby overrule it.
*** *** ***
9.9 In the present case, the women workers were certainly
employed for wages in connection with the work of the
respondent Company. The definition of “employee” under Section
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2026:CHC-OS:3212(f) is an inclusive definition, and includes workers who are
engaged either directly or indirectly in connection with the work
of the establishment, and are paid wages.
10. In the present case, the women workers were directly
engaged by the management in connection with the work of the
respondent Company, which was set up as a readymade
garments industry in Marathwada. The women workers were
paid wages on per-piece basis for the services rendered. Merely
because the women workers were permitted to do the work
offsite, would not take away their status as employees of the
respondent Company.”
36. By filing their written notes the PF authorities being the
respondent nos.1 and 2 herein, have reiterated their case as made out in
their affidavit-in-opposition.
37. Now relying upon the judgment in Godavari Garments Ltd.
(supra) in respect piece rate workers being covered under the definition
of „employee‟ (para 9.5) it has been held that:-
i) all factors that have been referred to in the cases on topics, should
be considered to tell a contract of service.
ii) the Court observed that the employer’s right to reject the end
product if it does not conform to the instructions of the
employer speaks for the element of control and supervision.
So also the right of removal of the workman or not to give the work
has the element of control and supervision.
38. In the present case, there is no question of rejecting any end
product if it does not conform to the instruction of the employer, in view
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of the nature of work performed by the Prokolpo Sahayaks, which is
entirely different from the casual, contractual or piece rated workers.
39. The Prokolpo Sahayaks who work as motivators, are paid
performance relating incentives to be decided by the Department of Self-
Help Group & Self-Employment.
40. A Prakalpo Sahayak (Project Assistant) operating as a Motivator is
a grassroots or community-level field worker. Their core nature of work
involves creating awareness, mobilizing local communities, and driving
active public participation in government, social welfare, or
developmental projects. They are entrusted with:-
(i) Creating Awareness by Educating the public about the
benefits and objectives of specific government policies, health
initiatives, or development schemes.
(ii) Persuading rural or targeted communities to adopt better
practices (e.g., sanitation, healthcare, education).
(iii) Overcoming social, cultural, or traditional barriers through
constant dialogue and persuasion.
(iv) Gathering local feedback, grievances, and community needs,
and reporting them to higher authorities to improve project
implementation.
(v) Ultimately, the Motivator acts as the “human face” of the
project, turning abstract policy goals into tangible, accepted
practices by inspiring trust and active involvement from the
target population.
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41. The motivators motivate unemployed youth to entrepreneurship
with Government aid/support/subsidy. Towards this motivation, the
Government pays certain amount of incentive to the Motivators through
the petitioner company.
42. The High Court in WPA No.11630 of 2021 vide an order dated
29.09.2021 held:-
“The conditions of engagement of the petitioners
nowhere leave any room of doubt that such
engagement is not at all akin to any Government
Employment, where the employees are paid a fixed
periodical remuneration. The principle of equal pay for
equal work may be said to have applicability in case of
a Government Employee on a fixed remuneration.
However, the petitioners are entitled to incentive,
implying that the better the performance, the better
the incentive (i.e., the earning). It is a quite fair system
but one in which the principle of equal pay for equal
work can never be applicable.”
43. Both parties have relied upon the definition of “basic wages” as
defined under Section 2(b) of the EPF & MP Act, 1952:-
“Section 2(b) “basic wages” means all emoluments which
are earned by an employee while on duty or [on leave or
on holidays with wages in either case] in accordance with
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2026:CHC-OS:321the terms of the contract of employment and which are paid or
payable in cash to him, but does not include–
(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash
payments by whatever name called paid to an
employee on account of a rise in the cost of living),
house-rent allowance, overtime allowance, bonus,
commission or any other similar allowance payable
to the employee in respect of his employment or of
work done in such employment;
(iii) any presents made by the employer;”
44. Considering the said definition, it is to be seen as to what kind of
wages/allowances/remuneration, would be covered/included in “basic
wages” and/or which kind of remuneration would be covered/subjected
to provident fund deduction.
45. In the present case, the Prakalpo Sahayaks as motivators
admittedly are not paid any “emoluments” “while on leave or on
holdings” as provided under Section 2(b) of the Act, which defines basic
wages.
46. Yes, employees receiving only incentives can be entitled to
Provident Fund (PF) benefits, provided their earnings are treated as
regular, assured wages under an employment contract. However, purely
variable, performance-based payouts are generally excluded from PF
calculations.
23
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47. The key factors determining PF eligibility are:-
Fixed Incentives: If the incentive is a guaranteed, uniform payment that
every employee receives regardless of performance, it is considered a part
of “Basic Wages” and is subject to PF contributions.
Variable Incentives: If the incentive is strictly performance-based,
variable, and not universally paid to all employees, it is not subject to PF
deductions.
48. In Regional Provident Fund Commissioner (II)
West Bengal v. Vivekananda Vidyamandir, (2020) 17 SCC 643, the
Supreme Court held:-
“13. Basic wage, would not ipso facto take within its ambit
the salary breakup structure to hold it liable for provident
fund deductions when it was paid as special incentive or
production bonus given to more meritorious workmen who
put in extra output which has a direct nexus and linkage
with the output by the eligible workmen. When a worker
produces beyond the base or standard, what he earns was
not basic wage. This incentive wage will fall outside the
purview of basic wage.
17. Any variable earning which may vary from
individual to individual according to their efficiency
and diligence will stand excluded from the term
“basic wages” was considered in Muir Mills Co.
Ltd. v. Workmen [Muir Mills Co. Ltd. v. Workmen, AIR
1960 SC 985] observing: (AIR p. 988, para 11)
“11. Thus understood “basic wage” never includes the
additional emoluments which some workmen may earn, on
the basis of a system of bonuses related to the production.
The quantum of earning in such bonuses varies from
individual to individual according to their efficiency and
diligence; it will vary sometimes from season to season with
24
2026:CHC-OS:321the variations of working conditions in the factory or other
place where the work is done; it will vary also with
variations in the rate of supplies of raw material or in the
assistance obtainable from machinery. This very element of
variation excludes this part of workmen’s emoluments from
the connotation of “basic wages”. …”
18. In Manipal Academy of Higher Education v. Provident
Fund Commr. [Manipal Academy of Higher
Education v. Provident Fund Commr., (2008) 5 SCC 428 :
(2008) 2 SCC (L&S) 114] , relying upon Bridge and Roofs
case [Bridge & Roofs Co. Ltd. v. Union of India, (1963) 3
SCR 978 : AIR 1963 SC 1474] it was observed: (SCC pp.
434-35, para 10)
“10. The basic principles as laid down in Bridge and Roofs
case [Bridge & Roofs Co. Ltd. v. Union of India, (1963) 3
SCR 978 : AIR 1963 SC 1474] on a combined reading of
Sections 2(b) and 6 are as follows:
(a) Where the wage is universally, necessarily and
ordinarily paid to all across the board such emoluments are
basic wages.
(b) Where the payment is available to be specially paid to
those who avail of the opportunity is not basic wages. By
way of example it was held that overtime allowance, though
it is generally in force in all concerns is not earned by all
employees of a concern. It is also earned in accordance with
the terms of the contract of employment but because it may
not be earned by all employees of a concern, it is excluded
from basic wages.
(c) Conversely, any payment by way of a special incentive
or work is not basic wages.”
19. The term “basic wage” has not been defined under the
Act. Adverting to the dictionary meaning of the same
in Kichha Sugar Co. Ltd. v. Tarai Chini Mill Majdoor
Union [Kichha Sugar Co. Ltd. v. Tarai Chini Mill Majdoor
Union, (2014) 4 SCC 37 : (2014) 1 SCC (L&S) 773] , it was
observed as follows: (SCC pp. 40-41, paras 9-10)
25
2026:CHC-OS:321
“9. According to http://www.merriam-webster.com
(Merriam-Webster Dictionary) the word “basic wage” means
as follows:
„(1) a wage or salary based on the cost of living and used as
a standard for calculating rates of pay
(2) a rate of pay for a standard work period exclusive of
such additional payments as bonuses and overtime.‟
10. When an expression is not defined, one can take into
account the definition given to such expression in a statute
as also the dictionary meaning. In our opinion, those wages
which are universally, necessarily and ordinarily paid to all
the employees across the board are basic wage. Where the
payment is available to those who avail the opportunity
more than others, the amount paid for that cannot be
included in the basic wage. As for example, the overtime
allowance, though it is generally enforced across the board
but not earned by all employees equally. Overtime wages or
for that matter, leave encashment may be available to each
workman but it may vary from one workman to other. The
extra bonus depends upon the extra hour of work done by
the workman whereas leave encashment shall depend upon
the number of days of leave available to workman. Both are
variable. In view of what we have observed above, we are
of the opinion that the amount received as leave
encashment and overtime wages is not fit to be included for
calculating 15% of the hill development allowance.”
21. Applying the aforesaid tests to the facts of the present
appeals, no material has been placed by the establishments
to demonstrate that the allowances in question being paid
to its employees were either variable or were linked to any
incentive for production resulting in greater output by an
employee and that the allowances in question were not paid
across the board to all employees in a particular category or
were being paid especially to those who avail the
opportunity. In order that the amount goes beyond the basic
wages, it has to be shown that the workman concerned had
26
2026:CHC-OS:321
become eligible to get this extra amount beyond the normal
work which he was otherwise required to put in. There is no
data available on record to show what were the norms of
work prescribed for those workmen during the relevant
period. It is therefore not possible to ascertain whether extra
amounts paid to the workmen were in fact paid for the extra
work which had exceeded the normal output prescribed for
the workmen. The wage structure and the components of
salary have been examined on facts, both by the authority
and the appellate authority under the Act, who have arrived
at a factual conclusion that the allowances in question were
essentially a part of the basic wage camouflaged as part of
an allowance so as to avoid deduction and contribution
accordingly to the provident fund account of the employees.
There is no occasion for us to interfere with the concurrent
conclusions of facts. The appeals by the establishments
therefore merit no interference. Conversely, for the same
reason the appeal preferred by the Regional Provident Fund
Commissioner deserves to be allowed.”
49. In the present case there is no base (basic) wage and only incentive
wage which has direct nexus and linkage with the output by the
motivators (Prakalpo Sahayaks).
50. In Vivekananda Vidya Mandir (supra) it is further held that
“certain earnings” are excluded, though they must be earned by
employee in accordance with the terms of the contract of employment
para 17 in Vivekananda Vidya Mandir (supra) clearly states:-
“17. Any variable earning which may vary from
individual to individual according to their efficiency
and diligence will stand excluded from the term “basic
wages” was considered in Muir Mills Co. Ltd. v.
27
2026:CHC-OS:321
Workmen [Muir Mills Co. Ltd. v. Workmen, AIR 1960 SC
985] observing: (AIR p. 988, para 11)“11. Thus understood “basic wage” never includes the
additional emoluments which some workmen may earn, on
the basis of a system of bonuses related to the production.
The quantum of earning in such bonuses varies from
individual to individual according to their efficiency and
diligence; it will vary sometimes from season to season with
the variations of working conditions in the factory or other
place where the work is done; it will vary also with
variations in the rate of supplies of raw material or in the
assistance obtainable from machinery. This very element
of variation excludes this part of workmen’s
emoluments from the connotation of “basic wages”. …”
18. ………………………
(c) Conversely, any payment by way of a special
incentive or work is not basic wages.”
51. The Muir Mills Co. Ltd. Kanpur vs Its Workmen, 1960 AIR 985,
decided on 7 April, 1960, the Supreme Court held:-
“………….The real question therefore is whether the
Government order required or authorised the company to
include the incentive bonus and the production bonus which
they had been so long paying in fixing the new piece rate for
the purpose of compliance with the directions given in the
Government order as regards the basic wages. In finding the
correct answer to this question it is necessary to examine the
entire scheme of the Government order. The relevant clauses
of the Government order have already been set out. The
purpose of the scheme, on the face of it, is to make it
obligatory on the employers in different industries to keep
wages of workmen at a certain level. This purpose is sought
to be achieved by laying down on the one hand the basic
wages Which must be paid and on’ the other hand the
dearness allowance-called in the Government order dear food
allowance-which must be paid. The concept of basic wage is
familiar to employers and workmen and all who have to deal
with the problems of labour’s remuneration. It may be
28
2026:CHC-OS:321profitably remembered in this connection that the concept of a
” basic ” is not peculiar to wages alone. For instance, when
any rationing system is introduced for any commodity,
whether it is food, or coal, or petrol or some other commodity,
it is usual to fix a quantum as the basic ration. The
underlying idea is to fix some amount as what every
individual coming under the system will get; while additional
amounts to be fixed in accordance with further directions will
be allowed to some individuals, in view of their special
claims as supplementary rations. ” Basic ” in all such cases
is what is normally allowable to all- irrespective of special
claims. The phrase “I basic wages ” is also ordinarily
understood to mean that part of the price of labour, which the
employer must pay to all work-‘ men belonging to all
categories. The phrase is used ordinarily in marked contra-
distinction to ” dearness allowance “, the quantum of which
varies from time to time, in accordance with the rise or fall in
the cost of living.
Thus understood “basic wage” never includes the additional
emoluments which some workmen may earn, on the basis of
a system of bonuses related to the production. The quantum
of earnings in such bonuses varies from individual to
individual according to their efficiency and diligence ; it will
vary sometimes from season to season with the variations of
working conditions in the factory or other place where the
work is done; it will vary also with variations in the rate of
supplies of raw material or in the assistance obtainable from
machinery. This very element of variation, excludes this part
of workmen’s emoluments from the connotation of ” basic
wages “. But, says the appellant, whatever may be ordinarily
under. stood by the word ” basic wages ” hardly matters
when the Government order itself contains a definition of ”
basic wage “. Clause 8, which has already been referred to is
in these words:-” Basic Wages ”
for the purposes of this order will mean consolidated wages
payable to an employee on November 30, 1948, minus Dear
Food Allowance calculated according to the rates prevalent in
the concern on the said date.” On behalf of the appellant Mr.
Pathak concentrates on the words ” consolidated wage “, and
argues that everything which answers to the description of
wage must be included in this process of consolidation.
Contending next that the emoluments payable by way of
production bonus and incentive bonus are ” wages even if not
ordinarily understood to be basic wages he argues that the
result of the definition in cl. 8 is that basic wages for this
29
2026:CHC-OS:321order is the sum total of all emoluments answering to the
description of wages thus including production and incentive
bonuses, but excluding by reason of the express words used
” dearness allowance, In support of his argument that
production or incentive bonuses which used to be paid by the
company is also a kind of wage the learned advocate has
placed strong reliance on some observations made by this
Court in Titaghur Paper Mills Co., Ltd. v. Their Workmen (1)
that a production bonus is in the nature of an incentive wage.
We will presently consider how far the fact that these
bonuses are in the nature of an incentive wage assists the
appellant’s contention that it has to be included in the ”
consolidated wage” within the meaning of cl. 8 of the order.
But before we do that, it will be proper to see exactly what
this Court said in the above case. A question had been raised
as regards the jurisdiction of the Industrial Tribunals to go
into the question of any production bonus claim at all, that
being a matter of agreement between the employer and the
employees. In considering this question this Court thought fit
to consider first what a production bonus essentially is. In
the course of that discussion the Court said:-
“Before we go into the question of jurisdiction of a tribunal
under the Industrial Disputes Act, 1947 (hereinafter called
the Act), we should like to consider what production bonus
essentially is. The payment of production bonus depends
upon production and is in addition to wages. In effect it is an
incentive to higher production and is in the nature of an
incentive wage.”
“There is a base or standard above which extra payment is
made for extra production in addition to the basic wage. Such
a plan typically guarantees time wage up to the time
represented by standard performance and gives workers a
share in the savings represented by superior performance.”
“Therefore generally speaking, payment of production bonus
is nothing more or less than a payment of further
emoluments depending upon production as an incentive to
the workmen to put in more than the standard performance.
Production (1) [1959] SUPP. 2 S.C.R. 1012 bonus in this case
also is of this nature and is nothing more than additional
emolument paid as an incentive for higher production. We
shall later consider the argument whether in this case the
production bonus is anything other than profit bonus. It is
enough to say at this stage that the bonus under the scheme
30
2026:CHC-OS:321in this case also depends essentially on production and
therefore is in the nature of incentive bonus.”
It is important to notice that while the learned counsel is
undoubtedly right in saying that a bonus related to
production was described in this case as in the nature of an
incentive wage, the Court was equally emphatic in laying
down that such bonuses form no part of wages as ordinarily
understood and again that these are in addition to basic
wages. Can it be reasonably said that even such “incentive
wage” though not forming part of basic wage’ as ordinarily
understood was intended to be included in the consolidation
of wages which cl. 8 speaks of? The answer must be in the
negative. While it is true that the word ” consolidated wage ”
taken away from the context would import the inclusion of
every kind of wage, we have to remember that here it is basic
wage which is being, defined. It will be unreasonable to think
that in defining basic wage the Government would include
something which is always understood to be outside the
ordinary concept of basic wage. Remembering as we must
that it is basic wage which is being defined here it is
reasonable to think that only such emolu- ments which are
receivable by the workmen generally, as a normal feature of
their earnings and therefore satisfy the characteristics of ”
basic wage “, are intended to be covered by the
consolidation. It is because dear food allowance does not
satisfy this characteristic that this has been expressly
excluded. Mr. Pathak’s argument that when in the case of
dearness allowance an express exclusion has been made,
everything else in the nature of wages has to be included
would have been of great force but for the fact that when
“basic wage” is being defined the presumption must be
that anything which is essentially different and
distinct from basic wage was not intended to be
included………………”
52. Thus, from the discussion above, it is evident that the „Prokolpo
Sahayaks‟ work as moderators and are paid incentive to the extent and
amount of work done (variable).
53. The incentive earned in this case is, thus, not fixed and that being
the case, would not be subjected to contribution/deduction toward
provident fund, even if taken along with the basic wage.
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2026:CHC-OS:321
54. As such when admittedly the Prokolpo Sahayaks as motivators
receive only incentives, which totally depends on the amount of work
performed by them, which makes the income variable, the same cannot
be taken for contribution/deduction, and that alone makes the Prokolpo
Sahayaks not eligible to be covered under the Employees Provident
Fund and Miscellaneous Act, 1952.
55. In respect of the guidelines in Godavari Garments Ltd. (supra)
relied upon by the private respondents regarding the piece rated workers,
it is clear that the service conditions of the piece rated workers is in no
way similar to the service conditions of the Prokolpo Sahayaks working
as motivators.
56. The question of rejection of work done by the Prokolpo Sahayaks
does not arise, considering their nature of work and as such the element
of direct control in their work is also absent.
57. Finally keeping with the view of the Co-ordinate Bench in WPA
11630 of 2021, Atiyar Rahaman Molla & Ors. vs. The State of West
Bengal & Ors., where in the Co-ordinate Bench held:-
“…………….The petitioners. accepted the engagement letter
knowing full well that their engagement was purely ad hoc
and temporary in nature. Secondly, the petitioners,
Motivators (Prakalpa Sahayaks) are paid Performance-
based Incentive.
The conditions of engagement of the petitioners
nowhere leave any room of doubt that such
engagement is not at all akin to any Government
Employment, where the employees are paid a fixed
periodical remuneration. The principle of equal pay for
equal work may be said to have applicability in case of
a Government Employee on a fixed remuneration.
However, the petitioners are entitled to incentive,
32
2026:CHC-OS:321implying that the better the performance, the better
the incentive (i.e., the earning). It is a quite fair system
but one in which the principle of equal pay for equal
work can never be applicable.”
58. The said observation also supports the view, taken by this Court
that the incentive received by the Prokolpo Sahayaks being variable,
thus not fixed, (and also not entitled to any wages while on leave or
holidays) cannot be subjected to the contribution/deduction towards
provident fund and thus the respondents no. 4 and 5 herein representing
the Prokolpo Sahayaks are not entitled to the benefit as decided by the
respondent provident fund authorities vide the impugned order, which
thus being not in accordance with law is set aside and quashed.
59. The writ petition being WPO 1222 of 2023 is accordingly
allowed.
60. Interim order, if any, stands vacated.
61. Connected applications, if any, also stands disposed of.
62. Urgent certified website copy of this judgment, if applied for, be
supplied expeditiously after complying with all, necessary legal
formalities.
(SHAMPA DUTT (PAUL), J.)
A.Sadhukhan
