Gratuity Payable On Resignation From Employment After 5 Years Of Continuous Service - Synopsis
Dilpreet Singh 16 Apr 2020

The Supreme Court noted that the gratuity provided for in the Payment of Gratuity Act is payable on resignation from employment after five years of continuous service.

The Board of Justice R. Banumathi and Justice AS Bopanna noted that the term 'termination' in Section 4 of the Act would also include resignation.

The Court considered an appeal filed by Rajasthan State Road Transport Corporation Ltd. against the judgment of the High Court which allowed the writ petition filed by the wife of the deceased employee claiming the withdrawal of benefits.

Having refused to act on his application for voluntary retirement, the employee submitted his resignation as he said he was under stress and his health condition had deteriorated further. This resignation has been accepted. It was after he died, that his wife came to the High Court. The High Court ordered it to be treated as a voluntary retirement and to release the retiral benefits to which he was entitled.

Allowing the appeal, the Board noted that, in the event of the submission of a request for voluntary retirement, the disciplinary proceedings were pending, there would be no absolute right to seek acceptance since the employer would be entitled not to consider the request for voluntary retirement if it wished to proceed with the investigation. The bench therefore observed:

As rightly pointed out by the learned counsel for the respondents, Section 4(1)(b) of the Payment of Gratuity Act, 1972 provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well. In that view, if the gratuity amount has not been paid to the respondent's husband, the liability to pay the same would subsist and the respondent No.1 will be entitled to receive the same in accordance with the provisions of the Act. In that regard it is directed that the appellants shall accordingly calculate the gratuity and pay the same to the respondent No.1, if already not paid. Such payment shall be made within four weeks from this date"


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