Payment of Gratuity Act, 1972
‘Employee’ under the Gratuity Act
Can every employee claim gratuity under the Act?
Not necessarily. An employee should be a regular one. Where a person is called whenever there is work and paid wages for the work done, he will not be an ‘employee’ within the meaning of section 2(e) of the Payment of Gratuity Act. It has also been held that a person who is not an employee engaged by way of contract of employment to work continuously from day-to-day but is offered work whenever available and paid wages, he will not be treated as an ‘employee’.1 However, the Supreme Court has held that a teacher, though engaged in very noble profession of educating the young generation but neither performing any skilled, semi-skilled or unskilled, manual or supervisory, technical work, will not be an ‘employee’ under section 2(e) of the Payment of Gratuity Act, thus not entitled to gratuity under the Act.2
The Division Bench of the Karnataka High Court, while commenting on section 4 of the Payment of Gratuity Act and 1st proviso to it, has held that the object behind the proviso is that while calculating the average of three months’ wages the receipt of three months’ wages by an employee should be taken into account for the purpose of settling the gratuity payable to an employee. Though the language employed is “for a period of three months immediately preceding the termination of service of the employee”, the same must be understood as the period of three months preceding the termination of service of an employee during which period he has received his wages. In cases where an employee has not worked a few days in a block period of three months prior to the date of termination, to that extent to make up that period, the earlier period where the employee has earned wages should be taken into account.3 A claim for gratuity rightly rejected when the claimant has worked only for three years.4
The Petitioner was Lecturer in College for the last 7 years. He submitted his resignation which was accepted by the Management. He was not paid the gratuity. He claimed gratuity by filing an appropriate application before the Controlling Authority under the Payment of Gratuity Act. His claim was dismissed by the Controlling Authority holding that he was not an employee covered under section 2(e) of the Act, hence not entitled to gratuity under the Act. The Appellate Authority also dismissed his appeal on the same grounds. He filed a writ petition which was dismissed by the learned Single Judge holding that teachers are not employees under the Act. Petitioner filed writ appeal. The Division Bench of the High Court held that the Central Government is empowered to make the Act applicable as per section 1(3)(c) of the Act, to establishments where 10 or more employees are employed. Accordingly, the Central Government has already extended application of the Act to educational institutions vide notification dated 3-4-1997 thereby amending the definition of ‘employee’ under section 2(e) of the Act including teaching staff therein. Accordingly, the teachers are entitled to the benefits of the Act. Hence, appeal is allowed and impugned order of learned Single Judge, Controlling Authority and Appellate Authority are set aside.
References:
1. Velukutty Achhary v. Harrisons, Malayalam Ltd., 1993 LLR 20 (Ker HC).
2. Ahmedabad Pvt. Primary Teachers’ Association v. Administrative Officer, 2004 LLR 97 (SC): AIR 2004 SC 1426: 2004 AIR SCW 356.
3. Wazeerkhan Kudachi v. Appellate Authority under Payment of Gratuity Act, Belgaum, 2006 (III) FLR 606 (Kant HC).
4. Viramgam Municipality v. Dansig Chaturbhai Vagehla, 2009 LLR 631 (Guj HC).
5. Shamaraja Udupa v. Assistant Labour Commissioner, Mangalore, 2013 Lab IC 810 (Karn HC).