Understanding Gratuity Regulations for Teachers in Educational Institutions - Insights on Labor Laws

Dear All,

I was working as a Lecturer in an Engineering College for 7 years on a permanent basis. Recently, I resigned from there.

1) Am I eligible for the Gratuity?
2) What is the minimum period after which gratuity is applicable?
3) Is there any Government Resolution (GR) of Maharashtra regarding this? Please forward it to me at [Login to view].

Thank you,
Prof. Prashant Shinde

Dear Prof. Prashant Shinde,

It is hereby clarified that teachers are not entitled to receive gratuity under the Payment of Gratuity Act, 1972. If the Maharashtra Government has issued any special instructions in this regard, or if your college management has established rules for gratuity payment, then the situation may be different.

Regards,

R.N. Khola
(Labour Law & Legal Consultants)
09810405361

Mr. Khola is correct. But very soon, they will be brought under the gratuity act. Please see the news article.

The Union Cabinet today gave its approval for the introduction of a Bill in this regard in Parliament that will bring teachers within the ambit of the "employee" definition. "This will result in the coverage of teachers in educational institutions under the Payment of Gratuity Act, 1972, as per a Supreme Court decision," Parliamentary Affairs Minister Priyaranjan Dasmunsi told reporters after the Cabinet meeting.

Herewith, I have attached the gratuity details for your reference. I hope it is useful to you.

Educational institutions are covered under the definition of "Industry" in the Industrial Disputes Act of 1947, as per the Gazette notification of 3rd April 1997. Consequently, teachers are entitled to gratuity.

Dear Madhu.T.K,

Education institutions are establishments and even fall under the definition of commercial establishments. However, currently, teachers are not considered workmen or employees under the Industrial Disputes Act. Similarly, teachers are not classified as employees under the purview of the Payment of Gratuity Act since teaching is regarded as a "noble profession." On the other hand, all administrative staff members and the Principal of the school or college are considered 'employees' and are eligible for gratuity.

Nonetheless, there appear to be differing interpretations in certain states. The efforts to include teachers under the Gratuity Act and ID Act are commendable because, at present, teachers are classified as employees under the Employees' Provident Fund Act. They are also covered by the Employees State Insurance, which was originally intended for 'workmen.' If a teacher is recognized as a workman under the ESI Act and EPF Act, and considering that these two central Acts do not acknowledge teaching as a "noble profession," why should teachers not be included as workmen under the Payment of Gratuity Act?

Regards,

Madhu.T.K

Thank you, Mr. Madhu, for your insights. Education institutions are establishments and fall under the definition of commercial establishments. However, currently, teachers are not considered workmen or employees under the Industrial Disputes Act. Similarly, teachers are not classified as employees under the Payment of Gratuity Act due to the perception of teaching as a "noble profession." On the other hand, all administrative staff members and the Principal of the school or college are deemed as 'employees' and are entitled to gratuity.

Nevertheless, there are differing interpretations in some states. The efforts to include teachers under the Gratuity Act and ID Act are commendable because, at present, teachers are recognized as employees under the Employees Provident Fund Act. They are also encompassed by the Employees State Insurance, originally designed for 'workmen.' If teachers are classified as workmen under the ESI Act and EPF Act, and since these two central Acts do not consider teaching as a "noble profession," it raises the question of why teachers should not be considered under the purview of the Payment of Gratuity Act.

Regards,

Madhu.T.K

Dear Prof. Shinde,

Find enclosed herewith the latest amendment in the Gratuity policy stating that teachers are eligible for gratuity.

Regards,

Tirlok Dhir

Dear All,

Thank you for providing answers to my query about Gratuity. I still have some doubts.

1) As I worked in Maharashtra state, particularly in an Engineering college as a Lecturer, some people have mentioned that the College does not fall under factory law, hence I may not be entitled to Gratuity.

2) Can anyone provide information about this?

3) Has the Maharashtra Government issued a Government Resolution (GR) on this issue?

-- Prof. Prashant B. Shinde
Walchand College of Engineering, Sangli, Maharashtra
Email: [sprashant27@gmail.com](mailto:sprashant27@gmail.com)

This is an Amendment Bill.
Has it become an Act? (i.e. passed by both Houses of Parliament and given Presidential assent).

Regards.

The Employees' State Insurance (ESI) Act is applicable to those earning wages up to ₹10,000. College and university teachers typically earn salaries exceeding this threshold. Please clarify my doubts regarding the applicability of the act to teachers.

Thank you very much for the attachment by Tirlok.

I understand that the bill has not been passed as an amendment to the primary Act, although it was a good initiative in this regard.

The applicability of the ESI Act to educational institutions has been determined by state authorities. For example, the Kerala government has extended the facility to educational institutions, including teachers, subject to the eligibility conditions as prescribed under the Act. Therefore, teachers and others earning a salary of not more than Rs 10,000 in educational institutions operated by private management without government aid are covered. Conversely, teachers earning more than Rs 10,000, as well as employees in factories or establishments earning over Rs 10,000, will not be covered. Similarly, the ESI Act applies only to employees of unaided/self-financing schools and colleges, not to institutions run by the government or private institutions receiving financial aid from the government.

Regards,

Madhu T.K

Mr. Khola,

Greetings from me!

I have read your posts here multiple times and I appreciate your guidance. It has been very helpful at work and has also enhanced my knowledge.

I am working as an Assistant Manager in HR. I am seeking a change for better career prospects. My preferred location is Gurgaon. Can you please guide me as I am currently working in Gandhinagar, Gujarat?

Thanks & Regards, Priyanka Sharma

The conversation was started some two years back, I think. By now, the Gratuity Act amendment has taken place, and as of now, teachers are also covered under the Act and are eligible for gratuity.

The salary for the purpose of calculating gratuity should include Dearness Allowance since it is a part of the statutory salary by all means. Although there are differences of opinion about the treatment of HRA and other components, DA is always part of the statutory salary under all labor Acts.

Madhu.T.K

I have read on labourlawreporter.net for June 2012 month judgment in which the below mentioned is:
Teacher would get gratuity w.e.f. 3.4.1997. Bom. HC 618

So please go through the June 2012 Issue of the journal of HRM & LLR to understand the judgment. I don't have the same journal to read the said judgment, but I request to read.

Dear Seniors,

This is my first time on this forum, so please excuse if I am not posting in the right place.

One of the most senior executives of the company I work for resigned in February 2014 after working with the company for about 14 years. We had fewer than 10 employees in the fiscal year ending in March 2014, and also during April 2012 to March 2013, we had less than 10 employees. In the fiscal year from April 2011 to March 2012, we may have had more than 10 employees.

1. Does the gratuity act apply to my company?

2. Even if it does not apply, I would appreciate an answer to this question. The employee who resigned drew a basic monthly salary of Rs75,000, Rs65,000, and Rs10,000 in three separate payments. He did this for tax planning purposes. So, according to the calculation method mentioned in this forum, what is the gratuity amount payable? Is it (Rs75,000 x 15 x 10) / 26 = Rs4,32,692 PLUS (Rs65,000 x 15 x 10) / 26 = Rs3,75,000 PLUS (Rs10,000 x 15 x 10) / 26 = Rs57,692 to be paid into three separate accounts? I also read in the act about the maximum amount of gratuity. Can anyone please advise us on this? I am new to this job and would appreciate anyone reaching out to help me with this. Thanks in advance.

Your establishment will come under the purview of the Payment of Gratuity Act, and as such, the resigned employee is eligible for gratuity for his 14-year-long service.

The law does not permit any person to take advantage by tax evasion or any other means. As an employer, you are also not expected to allow such misrepresentations. There is no genuineness when you say that one person worked under three names. It is illegal to forge signatures in the records. If he has been a member of PF, naturally, he would have represented three persons with three different accounts. This is, in fact, a criminal offence in which the employer is also a party by knowingly supporting the act of misrepresentation and forgery. Therefore, first of all, sort out the matter, pay tax, penalties, or whatever comes in the way, and then think about the payment of gratuity.

Madhu.T.K

Dear friend,

Thank you for enlightening us on such INGENIOUS, CREATIVE practices! He was being paid a salary in 3 different names. Logically, he is eligible for GRATUITY under all 3 names. When such practices were not objected to then, why is it being objected to now when the company is required to PAY GRATUITY?

What about the INCOME TAX evaded (by allowing a lower rate of Tax or availing exemptions) by such CRIMINAL CONSPIRACY? Better you seek expert legal help from a Lawyer. Also, remember, if you do not pay gratuity now, the employee may make out a criminal case against you. The matter is NO LONGER just in the realm of Employment & Labour Law.

Regards.

Dear all,

Hope you are doing well.

I have a question regarding gratuity calculation. Currently, we consider completion of 5 years of service for an employee to be eligible for gratuity payment. Is there an option to pay gratuity before the completion of 5 years? This is because we have already included gratuity in the CTC. Please provide an answer to this query.

Thank you.

By including the gratuity amount in the CTC statement alone will not make an employee entitled to gratuity without fulfilling the service conditions mentioned in the Payment of Gratuity Act because the CTC statement itself may contain certain conditions based on which the said amount will be paid. For example, you may include incentives in the CTC but the payment of the incentive will be based on certain conditions like performance, achievement of targets, etc., and that will be shown as a footnote to the CTC statement. Similarly, there should be a footnote against gratuity as a component of CTC which will say that as per existing law/Gratuity Rules, etc. In such a scenario, the employee may not be eligible to get gratuity if he has not put in the minimum qualifying service.

Against all the above, I would say that if gratuity is shown in the payslip as a deduction from the gross salary or CTC, as the case may be, the employee will be entitled to get it back with interest even if he has not put in five years of service. This is because, in such a case, it is a monthly deduction towards a fund, and whatever is deducted towards a fund by the employer should be given back to the employee once the employee-employer relationship is terminated. For example, PF deduction is refundable even if the establishment is an exempted one and is maintaining its own PF Trust. ESI, another approved deduction, is towards a scheme in return of which the employee gets some benefits. Moreover, an employer is not expected to deduct any amount from the salary of an employee towards any fund called the gratuity fund.

Madhu.T.K