Case Note & Summary
The petitioner, Baban S/o Rama Khakale, a retired employee of the Maharashtra State Farming Corporation Ltd., filed a writ petition challenging the judgment of the Appellate Authority dated 21/03/2016 in Appeal (PGA) No.263/2016. The petitioner had worked from 1973-1974 and superannuated on 31/05/2012 with last drawn wages of Rs.6,930/- per month. A pay revision under the 5th Pay Commission was made effective from 01/01/2008 on 31/05/2015, benefiting the petitioner. The dispute centered on whether weekly holidays could be added to days actually worked to complete 240 days in a calendar year for gratuity eligibility under the Payment of Gratuity Act, 1972, whether the retrospective pay revision entitled the petitioner to additional gratuity, and whether interest was payable on delayed gratuity. The court held that weekly holidays are to be included as days worked for computing 240 days, relying on the definition of 'continuous service' under Section 2A of the Act. It further held that the petitioner is entitled to gratuity computed on the revised wages due to the retrospective pay revision. Additionally, the court directed payment of interest at 10% per annum on the gratuity amount from 01/06/2012, the day after superannuation, until actual payment, as the respondent had delayed payment. The writ petition was allowed, setting aside the Appellate Authority's judgment and directing the respondent to pay gratuity with interest within four weeks.
Headnote
A) Gratuity - Eligibility - Computation of 240 days - Weekly holidays - Under Section 4 of the Payment of Gratuity Act, 1972, weekly holidays are to be included as days worked for determining whether an employee has completed 240 days in a calendar year - Held that the petitioner is entitled to gratuity as weekly holidays are deemed as working days (Paras 9-10). B) Gratuity - Calculation - Pay Revision - Retrospective Effect - Under Section 4 of the Payment of Gratuity Act, 1972, when pay revision is made effective retrospectively, the employee is entitled to gratuity computed on the revised wages - Held that the petitioner is entitled to additional gratuity based on revised pay (Para 11). C) Gratuity - Interest - Delay in Payment - Under Section 7(3A) of the Payment of Gratuity Act, 1972, interest is payable on delayed gratuity from the date of entitlement until payment - Held that the respondent must pay interest at 10% per annum on the gratuity amount from 01/06/2012 (Paras 12-13).
Issue of Consideration
Whether weekly holidays can be added to days actually worked for completion of 240 days in a calendar year for gratuity eligibility; whether retrospective pay revision entitles additional gratuity; whether interest is payable on delayed gratuity
Final Decision
Writ petition allowed. The judgment of the Appellate Authority dated 21/03/2016 is set aside. The respondent is directed to pay gratuity to the petitioner by including weekly holidays as days worked, computing gratuity on revised wages, and paying interest at 10% per annum from 01/06/2012 until actual payment, within four weeks.
Law Points
- Weekly holidays are to be included as days worked for computing 240 days eligibility for gratuity
- pay revision with retrospective effect entitles employee to additional gratuity
- interest is payable on delayed gratuity from the date of entitlement
