In the judgment of C.M.A(MD)No.861 of 2022 by the Madurai Bench of the Madras High Court, dated 23rd March 2023, the following key points were addressed:

Background: The case involved an appeal filed by the Employees State Insurance Corporation (ESIC) against a decision by the Labour Court. The ESIC contested the liability of Sundaram Textiles Limited to pay contributions for stipends paid to their apprentice employees.

Legal Definitions: The case centered around the interpretation of the Employees State Insurance Act (ESI Act). The ESIC argued that the stipends paid to apprentices qualified as “wages” under Section 2(22) of the ESI Act, making the company responsible for contributions. The respondent, Sundaram Textiles Limited, claimed that their apprentice employees were not covered by the ESI Act as they were engaged under certified standing orders, and, therefore, were not liable for contributions.

Pre-Amendment Status: The judgment noted that before an amendment to the ESI Act on 1st June 2010, apprentice employees engaged under certified standing orders were not considered employees for the purpose of contributions under the ESI Act.

Ruling: The court examined legal precedents and determined that the respondent’s apprentices were not employees under the ESI Act. They were engaged for the purpose of learning skilled work and were not entitled to claim regular employment. This meant that the stipends paid to them did not qualify as “wages,” and therefore, the respondent was not liable for contributions under the ESI Act.

Amendment Date: The judgment emphasized that the period for which contributions were claimed (from 4/2002 to 3/2007) fell before the 2010 amendment to the ESI Act. Therefore, the respondent was not liable for contributions for that period.

Outcome: The Madras High Court upheld the decision of the Labour Court. This meant that Sundaram Textiles Limited was not required to pay contributions for the stipends paid to their apprentice employees, and the appeal by the Employees State Insurance Corporation was dismissed.In summary, the judgment clarified the legal status of apprentice employees under the ESI Act and determined that contributions were not applicable for the stipends paid to apprentices engaged under certified standing orders before the 2010 amendmet