Teachers at any level of education are not eligible for gratuity under Payment Gratuity Act, 1972

Aashray Chaudhary | Symbiosis Law School, Hyderabad | 26th December 2019

Birla institute of technology v/s State of Jharkhand

Facts

• The case is related to the Payment of Gratuity Act, 1972 (hereinafter referred to as “the act”). The Respondent no.4 (hereinafter referred to as “the respondent”) was an Assistant professor at the Birla Institute of Technology (the Appellant) and was superannuated[1] on 30^th November 2001.
• Thereafter the respondent made a representation to the appellant, praying for the payment of the Gratuity that is due to him. As the appellant had declined to pay such amount, the respondent filed an application before the controlling authority under the act. The authority allowed the application and ordered the appellant institute to pay a sum of Rs. 3,38,786/- along with interest of 10% p.a. to the respondent.
• Thereafter the appellant had lost at every appellate stage and hence he filed the appeal before the Apex Court.
•  The main question arising in this case was whether a teacher can be considered as an employee under the act. And thus this appeal was brought before the Apex Court.

Issue

1. Whether a “teacher” could be regarded as an employee under Section 2(e) of the Act?

What was Held

• The court at first through a judgement dated 7^th January 2019 held that a teacher cannot be regarded as an employee under section 2(e) of the act. The question was already dealt with and answered in another judgement of the Apex Court named as Ahmadabad Pvt. Primary Teacher Association vs. Administrative officer and others[2].
• The court in the above cited judgement compared various definition clauses of the word “employee” in different labour related legislations. It was of the view that if the legislature intended to cover in the definition of “employee” all kinds of employees, it could have used such wide language as is contained in various other enactments. Specific inclusion of certain categories of employees like managerial and administrative positions in section 2 (e) shows the limited applicability of the act.
• The Court was of the view that though the Division Bench in this case had considered the above mentioned judgement but it erred in distinguishing it on the ground that it is applicable only to the primary teachers working in the primary schools.
• In the present case the Respondent was an Assistant professor in an institute for Higher Studies and would be considered as a trained professional compared to a primary school teacher who can be untrained. The Court Denying any merit to this distinction said that Para 24 of the Judgement clearly states that “teachers” are clearly not intended to be covered by the definition of “employee”. In other words there was no distinction to be made between the teachers inter se while applying the above cited Judgement.
• The court also said that there are many states which have separate statutes granting gratuity benefits to teacher in educational institute.
•  However after such pronouncement it came to the notice of the Court that after the Decision rendered in Ahmadabad Pvt. Primary Teachers Association case[3] the Parliament amended the definition of the word “employee” as defined in Section 2(e) of the act by Amending Act No.47 of 2009 on 31^st December 2009 with retrospective effect from 3^rd April 1997.  
• Thus the Hon’ble Court Through a second Judgement dated 7^th March 2019 clarified it stance and reheard the matter on merits. It recognised that teachers would now come under the purview of “employee” under section 2(e) of the act as a result of amendment in 2009.
• Thus now the law laid down in Ahmadabad Pvt. Primary Teachers Association case[4] was no longer applicable to teachers and thus teachers were entitled to gratuity under the act.
• The court also said that the fact that the Constitutional validity of the  Amendment Act No. 47 of 2009 being challenged in a pending writ petition does not affect the constitutionality of the Amending act and nor does it affect the right of the respondent in claiming the gratuity amount from the appellant under the act.

[1]Section 2 (r) of the Payment of Gratuity Act, 1972 “superannuation”, in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service at the age on the attainment of which the employee shall vacate the employment

[2] (2004) 1 SCC 755

[3] Ibid

[4] ibid