Introduction:
The purpose of ascertaining the extent of damage or loss caused by the worker, the employer has to give a notice of the proposed forfeiture to the worker. Where no such notice was given, it was held that the matter required reconsideration. Gratuity cannot be forfeited unless quantum of loss or damage has been ascertained. In case of Bakshish Singh v. Darshan Engineering Works,1994 it was held that provision of a period of five years service as qualifying period in section 4(1)(b) is one of minimum service conditions made available to workers notwithstanding financial capacity of employer to bear its burden and it is reasonable restriction on the right of the employer to carry on business within the meaning of Article 19 of the Constitution and section 4(1)(b) of the gratuity Act is legal and valid. Even assuming that the presumption that a longer period of service for entitlement to gratuity on voluntary retirement or resignation is necessary to prevent labour from changing employment frequently that consideration has no bearing on the question whether a short period of qualifying service is violated of Article 19(1)(g) of the Constitution. Hence, the provision for a short qualifying period per se is not invalid and cannot be struck down generally as being violated of Article 19(1) (g) of the Constitution. There is no provision in the Act for exempting any factory, shop etc. from the purview of the Act covered by it except those where, the employees are in receipt of gratuity or the benefits of pension fund which are no less favorable than the benefit conferred under the Act. Payment of Gratuity Act is a welfare measure introduced in the interest of the general public to secure social and economic justice to workmen to assist them in old age and to ensure them a decent standard of life on their retirement. The Act imposed a reasonable restriction on the employer in respect of the fundamental right under Article 19(1) (g). The provision for payment of gratuity contained in section 4(1) (b) of the Gratuity Act is one of the minimum service conditions which must be made available to the employees notwithstanding financial capacity of employer to bear its burden and it is reasonable restriction on the right of the employer to carry on business within the meaning of Article 19 of the Constitution and section 4(1)(b) of the Act is legal and valid.
Background: The Payment of Gratuity Act, 1972 applies to establishments employing 10 or more persons. The main purpose for enacting this Act is to provide social security to workman after retirement, whether retirement is a result of superannuation, or physical disablement or impairment of vital part of the body. Therefore, the Payment of Gratuity Act, 1972 is an important social security legislation to wage earning population in industries, factories and establishments. The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh. The provisions for Central Government employees under Central Civil Services (Pension) Rules, 1972 with regard to gratuity are also similar. Before implementation of 7th Central Pay Commission, the ceiling under CCS (Pension) Rules, 1972 was Rs. 10 Lakh. However, with implementation of 7th Central Pay Commission, in case of Government servants, the ceiling has been raised to Rs. 20 Lakhs. Therefore, considering the inflation and wage increase even in case of employees engaged in private sector, this Government decided that the entitlement of gratuity should also be revised in respect of employees who are covered under the Payment of Gratuity Act, 1972. Accordingly, the Government initiated the process for amendment to Payment of Gratuity Act, 1972 to increase the maximum limit of gratuity to such amount as may be notified by the Central Government from time to time. Now, the Government has issued the notification specifying the maximum limit to Rs. 20 Lakh. In addition, the Bill also envisages to amend the provisions relating to calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave from ‘twelve weeks’ to ‘such period as may be notified by the Central Government from time to time’. This period has also been notified as twenty six weeks.
Implication of Gratuity: The Payment of Gratuity (Amendment) Bill, 2018 has been passed by Lok Sabha on 15th March, 2018 and by the Rajya Sabha on 22nd March, 2018, has been brought in force on 29th March, 2018.
Major Impact: The Bill as passed by both the Houses of Parliament and assented to by the Hon’ble President and notified by the Government. This will ensure harmony among workers in the private sector and in Public Sector Undertakings/ Autonomous Organizations under Government who are not covered under CCS (Pension) Rules. These employees will be entitled to receive higher amount of gratuity at par with their counterparts in Government sector.
Essential Evaluation:
Some evaluation arises which we have discussed in detail:
- Need of awareness: The need to create awareness of socio-economic legislation or to publicize it is hardly realized. Many employees are not aware for the gratuity. Because they do not know the statutory right of gratuity.
- Gratuity payable towards surety: The payment of gratuity is not absolute right since it can be forfeited on dismissal of the workman as per the provisions of section 4(6) of the Act. Even gratuity can’t be attached against a decree as passed by the Civil Court. Hence such a surety will not be justifiable.
- Gratuity to curtail employee: Gratuity is payable to an employee on termination of his employment under section 2(oo) of industrial disputes act. The definition is framed in widest terms except for obsoleteness any termination of service would amount to retrenchment for the purpose of the act. In case of State of Punjab v. Labour court, Jullundur & Ors, 1979 Supreme Court was held that retrenchment of worker will fall within the scope of section 4(1) of the act and a retrenched worker will be entitled to gratuity.
- Government servant designate to gratuity: The government servants are not covered under this act. The Supreme Court observed that section 2(3) of Payment Gratuity Act,1972 which defines employee where it is specifically provided that employee does not include any such person who holds a post under Central Government or State Government. This act does not provide the gratuity of government servant.
- Director of a company designate to gratuity: The definition of employee does not spell out as director of a company is an employee or not. It depends upon the functions of the director of company. If he performing his duties for the company then he can come within the definition.
- Payment of gratuity if there is no recommendation: In case of death of an employee the gratuity payable to the employee shall be paid to his nominee. If no recommendation has been made the same shall be payable to nominee and where any such nominee is a minor then the share of such minor shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank until the minor attains majority.
- Re-employed employee after obsoleteness: The act should be providing a provision that employee can re-employed after obsoleteness but the act does not provide re-employed to employee after obsoleteness. In case of Jeewanlal ltd. v Controlling Authority, The Madras HC was held that if an employee having been obsoleteness is reemployed by the employer without any break in service he will be able for payment of gratuity.
Conclusion:
The
problem of Gratuity is not a problem in or by itself. It is a part of the
larger issue of welfare of the nation as a whole. Besides the several failures
of implementation of the Act, there is many issues find that there are also
some obstacles to enforce the Act, which we have discussed in essential evaluation
in detail. The main reason of the Gratuity is the extreme form of poverty. The
State administration has not bothered much about the welfare of the poor
employees. No sincere efforts have been made for identifying and protecting
them. It seems that this situation will go on in the same way unless some
concerted efforts are made in the direction. It is submitted that the media and
other non-governmental organisations can play a vital role in exposing this
state of in human activity.
The following measures can be adopted in this regard:
- Public awareness and education is must.
- Generating schemes must be formulated in advance otherwise they will again fall back upon the system of Gratuity.
Deepanshi Rajput 