Monthly performance pay forming part of remuneration constitutes wages within the Referee’s jurisdiction.

The employee claimed recovery of unpaid performance pay/variable allowance under Section 14(1) of the West Bengal Shops and Establishments Act, 1963.

TCS challenged the Referee’s jurisdiction, arguing that the claimed performance pay was a bonus excluded from “wages” and that the claim required adjudication by a competent court.

The Referee declined to decide maintainability at the preliminary stage and directed the parties to adduce evidence.

TCS challenged the Referee’s orders dated 5 March 2026 and 23 June 2026.

The employment terms provided for monthly performance pay and a quarterly variable allowance; the employee relied on pay slips and settlement documents describing performance pay as part of salary.

Whether the employee’s monthly performance pay was “wages” under the Payment of Wages Act, 1936, as applicable to the proceedings under the West Bengal Shops and Establishments Act, 1963, and therefore within the Referee’s jurisdiction.

Whether the Referee’s orders declining to decide maintainability at the preliminary stage and directing the parties to proceed with evidence should be set aside.

Section 2(vi) of the Payment of Wages Act, 1936 defines “wages” to include remuneration payable in respect of employment and, under clause (c), additional remuneration payable under the terms of employment, whether called a bonus or otherwise; the statutory exclusion for certain bonuses applies where the bonus does not form part of remuneration payable under the terms of employment.

Section 14 of the West Bengal Shops and Establishments Act, 1963 empowers the Referee to deal with claims concerning wages.

In Bala Subrahmanya Rajaram v. B.C. Patil, the Supreme Court held that bonus payable as remuneration for services rendered or work done may constitute “wages”.

The judgment also referred to Bharat Chamber of Commerce and M/s. Gupta Electric Company concerning the limits on a Referee’s adjudication of complicated disputes.

The Court considered the employment terms alongside the pay slips and full-and-final settlement materials.

It found that the performance pay was fixed as a monthly component of remuneration, subject to review, and was paid in respect of the employee’s employment or work.

It therefore fell within Section 2(vi)(c), notwithstanding that the employer described it as productivity bonus or contended that it was not part of wages.

Applying Bala Subrahmanya Rajaram, the Court concluded that this remuneration was “wages” and thus within the Referee’s jurisdiction; the materials did not support TCS’s reliance on the statutory bonus exclusion.

It modified the impugned orders to require the Referee to proceed on that basis and adjudicate the claim in accordance with law.

TCS’s writ petition was dismissed.