Sales Commission would fall within the 3rd category of wages as defined underthe Act as additional remuneration and there has to be actual payment as the word used is paid and not payable, at intervals not exceeding two months. The question as to why the period of 2 months is fixed was debated in Supreme court in the case of Handloom House, Ernakulam Vs. RD,ESIC in Civil Appeal No.2521 of 1999 when it was held that no employer shall have the permission to draw the payment of contribution on the premise that annual payments have to be work out. Normally, the wage period is one month, but the Parliament would have thought that such "wage period" may be extended a little more but no employer shall make it longer than two months. This could be the reason for fixing a period of two months as the maximum period for counting the additional remuneration has to make it part of ‘wage’ under the Act. Therefore, the annual commission is excluded from the definition of the wages and hence no contribution is payable on the annual commission.
( Earlier instructions were issued vide Hqrs.letter No. Ins.III(2)-2/71 dated 10.8.71).


Where dealers/agents are appointed by the employers but no regular wages are paid and it is not obligatory on the part of such dealers/agents to attend to the factories/ establishments and they are paid commission only on the quantum of sales, in such cases the amount paid by the employer as commission/dealership does not constitute wage under Section 2(22) of the ESI Act and hence no contribution is payable.