Saturday, July 28, 2018

New Interpretation of Gratuity BY DLC

GRATUITY SHOULD BE ONE & HALF MONTH OF TOTAL WAGES OF COMPLETED SERVICE YEARS  N  NOT 15 DAYS AS PAID BY BANKS

Dear Friends

VERY GOOD  DEVELOPMENT
SERVICE GRATUITY REDEFINED BY ORDERS OF DLC HYDERABAD
CALCULATION SHOULD BE BASED ON PAY  WITH ALLOWANCES

We all know that the Bank employees are paid higher of the amounts, calculated as Service Gratuity and calculated as per Gratuity Act -1972. Higher of the amount is paid on the ground that Bank are paying Gratuity in “Better Terms”.

The Deputy Chief Labour Commissioner (DLC) (Central) Hyderabad in order dated 13.12.2017 against Saptgiri Gramin Bank has for the first time analysed the word “ Better Terms”.

1. 
*Components for Calculation of Service Gratuity*
In analysis the DLC has compared the components for calculation of Gratuity and  decided that the components  taken for calculation of gratuity amont  as per Gratuity Act -1972 cannot be ignored while calculating the amount of Service Gratuity. The word “Better Terms” has been thus extended to the components of calculation also.

As per Section 2 (S) of the Payment of Gratuity Act – ‘wages” mean all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment, which are paid or payable to him and included dearness allowance.

This definition of wages, under the Act is same for Officers, executives, workers & employees.

But the components for calculation of  Service Gratuity, defined in Service Regulations for officer are different.

This difference in components create discrimintation for calculation of Service Gratuity.

The DLC has examined, whether the Regulations defining components for claculation of Service Gratuity to officers are inconsistant with the provisions of the Act or not?

The establishments under the statutory obligation to pay gratuity are to pay Gratuity as provided for under Section 4 of the Act. Further Section 4 is required to be read along with Section 14 of the Act which says that the provisions of the Act shall have effect notwithstanding anything inconsistent therein contained in any enactment or in any instrument or contract having effect by virtue of any enactment other than this Act.

The provisions of the Act prevail over all other enactment or instrument or contract so far as the payment of gratuity is concerned.

The  view expressed by Hon’ble Supreme Court in Civil Appeal No 9087 of 2012 in case of Y.K.Singla Vs Punjab National Bank were as under -

“A perusal of Section 14 leaves no room for any doubt, that a superior status has been vested in the provisions of the Gratuity Act, vis-à-vis, any other enactment (including any other instrument or contract) inconsistent therewith.

Therefore, insofar as the entitlement of an employee to gratuity is concerned, it is apparent that in cases where gratuity of an employee is not regulated under the provisions of the Gratuity Act, the legislature having vested superiority to the provisions of the Gratuity Act over all other provisions/enactments (including any instrument or contract having the force of law), the provisions of the Gratuity Act cannot be ignored.”

*Conclusion:*

The Salary With Allowance as defined by the Gratuity Act-1972, will have the “Superior Status” and in “better terms” of payment of Gratuity by Banks, the Salary with Allowances has been decided as applicable for calculations of Service Gratuity also by the order of DLC.

2. 
*Number of Month’s Gratuity, beyond Service of 30 Years.*

Further the DLC has also analyzed the applicability of “One half” month pay per year taken for the calculation of Service Gratuity for the service period beyond 30 years.

The DLC has concluded that since the Service Gratuity is a better Scheme having  framed at the rate of one month pay up to 30 years (Subject to maximum 15 months pay), there is no logic in paying 15 days pays, after 30 years. There is extra incentive to retired employees who have served for more than 30 years meritorious service, therefore it should be by way of one and a half months pay, for each year of service as a reward to retred employee who rendered longer service in the Bank.

Even otherwise “half” means ½. “One & half” means 1 ½. If the intention of regulation is to give only 15 days pay, then they would have mentioned only “half” of month’s pay in Regulation.

*Conclusion*

Thus the DLC has decided applicability of  “one & a half months pay” with allowance as defined in Gratuity Act to be taken per years *_for service beyond 30 years for calculation of Service Gratuity as it is payable in “Better Terms”_*

The order is against Saptagiri Gramin Bank, Hyderabad and Bank has filed WP before single judge bench in High Court at Hyderabad. Bank had approached division bench to interfere in an interim order for 50% payment to the retired employees.

Division Bench has declined to interfere, but required the retired employee to provide Bank Guarantee.

DEVELOPMENTS
Based on order of DLC Hyderabad, RLC Ranchi has also passed similar order on 15.6.2018.

Friends, it is very important order by the DLC, Hyderabad and Bank will certainly peruse it up to Supreme Court, but it will have vital positive impact on the Gratuity Benefit to retirees of All Public Sector Banks.

The Associations of Bank Pensioners must keep track on and watch the developments of the case in High Court Hyderabad.

The WP No is 1682 of 2018 pending in High Court Hyderabad.

Sincerely Yours
(S.K.Mishra)
Secretary

ALLAHABAD BANK RETIREES’ WELFARE SOCIETY

130-B , Rajat Vihar Colony, Hoshangabad Road, Bhopal (M.P.)

RegistrationNumber
 01/01/01/33020/17
Affiliated with All India Allahabad Bank Pensioners & Retirees Association
Secretary –
S.K.Mishra – e-mail – mishrashivkumar@ yahoo.co.in
Mobile No. - 9826424626
ACRWS/2018/76-G

4 comments:

  1. Thank you for giving the this type of updates

    ReplyDelete
  2. The ceiling of Rs.10 lac existing then still valid?

    ReplyDelete
  3. Few officers of Gramina Bank have really struggled to get correct interpretation of OSR and their attempt may benefit lakhs of retired officers.

    ReplyDelete
  4. Gratuity is one of the amazing benefits of retirement, and many people who have offered long term service to their employers eagerly await for it. But there have been some recent changes in the gratuity rules made by the government and this has generated mixed response from employees of both private and public sectors.

    ReplyDelete