business world, hand, finance-541430.jpg

Teachers to be paid Gratuity as per the Payment of Gratuity Act, 1972

-Report by Reyanshi Bansal

It has been held by the Hon’ble Supreme Court of India in the case of Independent School Federation v. Union of India that teachers are to be included in the definition of employee and the legal flaw of excluding them from being paid gratuity is to be terminated.

The Payment Gratuity Act, 1972, gave rights to those employees who rendered continuous service for at least five years to be paid gratuity on their retirement due to death or disability due to accident or disease. However, the definition of “employee” was restrictive in such a manner that it excluded private school teachers from receiving such payment.
This definition was rectified after the case of Ahmedabad Private Primary Teachers’ Association v. Administrative Officer via the Payment of Gratuity (Amendment) Bill, 2007 to involve teachers even though the court held that teachers were not “employees” under the Act. The constitutional validity of this amendment was challenged by several private schools.

The petitioners contended that the legislation overrules the judicial decision and goes against the doctrine of separation of powers. Furthermore, they found the amendment unreasonable, excessive and harsh, therefore, unconstitutional. Another argument was that it would be tyrannous and autocratic to make the private institutions liable for payment of gratuity for service before 1997. One of the submissions stated that the amendment should
only be valid if the Government refunds the taxes paid. Finally, the private schools and writ petitioners insisted on the enactment of the Repealing and Amending Act, 2016 by which the Amendment Act 2009 was repealed.

In response to the first ground, the court observes that the legislature can amend the language of a certain provision that was the subject matter of a court decision, and the court (in the case of Ahmedabad Private Primary Teachers’ Association) acknowledged that cognization of the situation of teachers in various establishments where gratuity is not available should be taken by the legislature.

The claim that the amendment is unconstitutional lacks merit and substance. Due to an error in law, teachers were unavailable to get access to rightly deserved gratuity whereas all other employees in the private school were. The purpose of the amendment was to remove such a technical flaw and give effect to what was intended by the Payment of Gratuity Act.

The gratuity is not despotic as argued because the employees are entitled to a gratuity if the conditions of the Act are met and there is an upper cap limit so it can be computed reasonably. This is a right accrued by the teachers and not giving them so, would be unjust. Moreover, the legislature is not confined to the tax statutes thereby making the penultimate argument unfounded and irrational. Onto the last contention of the Repealing Act, section 4 of the act directs that the repealing will not affect the validity, effect or consequence of any liability that has already been incurred. The court held that-

“The private schools would make payment to the employees/teachers along with the interest in accordance with the provisions of the Payment of Gratuity Act within a period of 6 weeks from today and in case of default, the employees/teachers may move the appropriate forum to enforce payment in accordance with the provisions of the Payment of Gratuity Act. In the facts of the case, there will be no orders as to costs.”

For the above-mentioned reasons, the court quashed the writ petitions and the transfer case and aforesaid appeals were dismissed. It was also reaffirmed that the purpose of the legislature was to give retrospective effect to the amendment made in the Payments of Gratuity Act,1972.

Leave a Reply

Your email address will not be published. Required fields are marked *