Hi Everybody,
I have always found the suggestions given by seniors and fellow members on Cite HR very useful in grasping the concepts of hrm in the practical sense.
Once again, I need your help in relation to a legal hrm issue. Could seniors please guide me regarding the 'Position of teachers under Payment of Gratuity Act 1972'? We are a leading private educational group employing 1000+ faculty members and at the time of formation of the group, the group policy w.r.t. gratuity was defined as:
"A member who leaves service of the Group on completion of at least 10 yrs of continuous service shall be eligible to payment of gratuity at the rate of half a month of pay last drawn for every completed yr of service subject to a max. of 15 months of pay".
As the requirement of yrs in service has been reduced to 5 yrs some time back and there is some confusion in relation to the position of teachers employed in pvt. educational institutes under 'Payment of Gratuity Act' , thus we felt the need to review our policy in the best interest of all stake-holders.
In relation to status of pvt. Institutes’ teachers under the the 'Payment of Gratuity Act ', I got hold on the following information :
"THE PAYMENT OF GRATUITY (AMENDMENT) BILL, 2007"
1.STATEMENT OF OBJECTS AND REASONS
The Payment of Gratuity Act, 1972 (the Act) provides for payment of gratuity to
employees employed in any establishment, factory, mine, oilfield, plantation, port, railway
company or shop employing 10 or more workers.
2.The Central Government had extended the provisions of the Act to the educational
institutions employing 10 or more persons vide this Ministry's notification No. S.O. 1080
dated 3rd April, 1997. The Hon'ble Supreme Court in its judgment dated 13th January, 2004,
in Ahmedabad Private Primary Teachers Association Vs Administrative Officer [AIR 2004
(SC) 1426] held that teachers are not entitled to gratuity under the Act, in view of the fact that
teachers do not answer description of "employee" who are "skilled", "semi-skilled" or
"unskilled". The Supreme Court observed that non-use of wide language similar to definition
of "employee" as is contained in section 2(f) of the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952, reinforces the conclusion that teachers are not covered
in that definition. Para 26 of the said judgment reads as follows:—
"Our conclusion should not be misunderstood that teachers although engaged
in very noble profession of educating our young generation should not be given any
gratuity benefit. There are already in several States separate statutes, rules and
regulations granting gratuity benefits to teachers in educational institutions which
are more or less beneficial than the gratuity benefits provided under the Act. It is for
the Legislature to take cognizance of situation of such teachers in various
establishments where gratuity benefits are not available and think of a separate
legislation for them in this regard. That is the subject matter solely of the Legislature
to consider and decide.".
3. Keeping in view the observations of the Hon'ble Supreme Court, it is proposed to
widen the definition of "employee", in order to extend the benefits of gratuity to the teachers,
by amending the same.
4. The Bill seeks to achieve the above objects.
FINANCIAL MEMORANDUM
The Payment of Gratuity Act, 1972 (the Act) provides for payment of gratuity to
employees employed in any establishment, factory, mine, oilfield, plantation, port, railway
company or shop employing ten or more workers. The Bill amends the definition of "employee"
in section 2(e) of the Act so that teachers shall also be entitled for payment of gratuity.
However, in this context I also came across another article which reads as follows:
“There is another Bill which has been introduced in the House of People (Lok Sabha) i.e. ‘The Payment of Gratuity (Amendment) Bill, 2007’ in which the term "employee" has been defined as follows: "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of factory, mine, oilfield, plantation, port, railway company, shop or other establishment, to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. But, till today, no headway has been made in bringing the new legislation.
The ridiculous thing is that though all the teachers discharge same duties, but only the teachers, who are covered under any special statutes, rules and regulations, will get gratuity benefits, especially govt. teachers and those come under Grant-in- aid. This is nothing but the violation of the Art.14 of the Constitution. A classification between unaided and aided teachers does not seem to be reasonable classification as they travel in the same boat for the same purpose. Here, another point to be noted is that members of non-teaching staff of an educational institution are entitled to the gratuity benefit, but teachers are excluded from the same, though, they are working in the same institution. Thus, the teachers working in purely private educational institutions, who are large in number in our country, will be deprived of this gratuity benefit unless these educational institutions extend this benefit to them also. Now, ball is in the court of legislatures. Thus, the attention of the legislature is invited to the matter raised in this judgement for an appropriate legislation. If they are really interested in protecting the teachers, they have to take necessary steps without delay to safeguard the interest of the teachers by bringing an amendment to the Act so as to include these aggrieved people.”
Looking at the information above, I am really confused about the applicability of this act to teachers in pvt. institutes .
Pls. guide me about :
1. What is the exact status of pvt. colleges' teachers under this act? Is this act uniformly applicable to both govt. & private sector teachers irrespective of their wages?
2. If we wish to extend the gratuity benefit to our teachers (even if its not compulsory under the act), then can we frame our own policy in this regard or strict conformation to Gratuity Act is required, because we would like to reach a solution that is acceptable to both the faculty and the top management?
3. Besides, is there any wage or basic pay limit for doling out gratuity benefits because again in this regard, I received very contradictory information, that is:
a.“The Act is not applicable to apprentices and persons holding a post under the Central or State government who are governed by any other rule providing for payment of gratuity.
The Act covers all employees who draw upto Rs. 3500 per month as wages. The maximum gratuity payable is Rs 3,50,000.”
b.“The Act enforces the payment of gratuity, as a statutory retiral benefit. Every employee irrespective of his wages is entitled to receive gratuity if he has rendered continuous service of 5 or more yrs.”
Pls. guide which of the above statements ‘a or b’ is valid?
4. Can a pvt. institute teacher with last drawn wages 1 L p.m. claim gratuity benefits as a matter of right or the decision for provision of gratuity to such an employee rests with the employer alone?
Looking forward to your valuable inputs.
I have always found the suggestions given by seniors and fellow members on Cite HR very useful in grasping the concepts of hrm in the practical sense.
Once again, I need your help in relation to a legal hrm issue. Could seniors please guide me regarding the 'Position of teachers under Payment of Gratuity Act 1972'? We are a leading private educational group employing 1000+ faculty members and at the time of formation of the group, the group policy w.r.t. gratuity was defined as:
"A member who leaves service of the Group on completion of at least 10 yrs of continuous service shall be eligible to payment of gratuity at the rate of half a month of pay last drawn for every completed yr of service subject to a max. of 15 months of pay".
As the requirement of yrs in service has been reduced to 5 yrs some time back and there is some confusion in relation to the position of teachers employed in pvt. educational institutes under 'Payment of Gratuity Act' , thus we felt the need to review our policy in the best interest of all stake-holders.
In relation to status of pvt. Institutes’ teachers under the the 'Payment of Gratuity Act ', I got hold on the following information :
"THE PAYMENT OF GRATUITY (AMENDMENT) BILL, 2007"
1.STATEMENT OF OBJECTS AND REASONS
The Payment of Gratuity Act, 1972 (the Act) provides for payment of gratuity to
employees employed in any establishment, factory, mine, oilfield, plantation, port, railway
company or shop employing 10 or more workers.
2.The Central Government had extended the provisions of the Act to the educational
institutions employing 10 or more persons vide this Ministry's notification No. S.O. 1080
dated 3rd April, 1997. The Hon'ble Supreme Court in its judgment dated 13th January, 2004,
in Ahmedabad Private Primary Teachers Association Vs Administrative Officer [AIR 2004
(SC) 1426] held that teachers are not entitled to gratuity under the Act, in view of the fact that
teachers do not answer description of "employee" who are "skilled", "semi-skilled" or
"unskilled". The Supreme Court observed that non-use of wide language similar to definition
of "employee" as is contained in section 2(f) of the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952, reinforces the conclusion that teachers are not covered
in that definition. Para 26 of the said judgment reads as follows:—
"Our conclusion should not be misunderstood that teachers although engaged
in very noble profession of educating our young generation should not be given any
gratuity benefit. There are already in several States separate statutes, rules and
regulations granting gratuity benefits to teachers in educational institutions which
are more or less beneficial than the gratuity benefits provided under the Act. It is for
the Legislature to take cognizance of situation of such teachers in various
establishments where gratuity benefits are not available and think of a separate
legislation for them in this regard. That is the subject matter solely of the Legislature
to consider and decide.".
3. Keeping in view the observations of the Hon'ble Supreme Court, it is proposed to
widen the definition of "employee", in order to extend the benefits of gratuity to the teachers,
by amending the same.
4. The Bill seeks to achieve the above objects.
FINANCIAL MEMORANDUM
The Payment of Gratuity Act, 1972 (the Act) provides for payment of gratuity to
employees employed in any establishment, factory, mine, oilfield, plantation, port, railway
company or shop employing ten or more workers. The Bill amends the definition of "employee"
in section 2(e) of the Act so that teachers shall also be entitled for payment of gratuity.
However, in this context I also came across another article which reads as follows:
“There is another Bill which has been introduced in the House of People (Lok Sabha) i.e. ‘The Payment of Gratuity (Amendment) Bill, 2007’ in which the term "employee" has been defined as follows: "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of factory, mine, oilfield, plantation, port, railway company, shop or other establishment, to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. But, till today, no headway has been made in bringing the new legislation.
The ridiculous thing is that though all the teachers discharge same duties, but only the teachers, who are covered under any special statutes, rules and regulations, will get gratuity benefits, especially govt. teachers and those come under Grant-in- aid. This is nothing but the violation of the Art.14 of the Constitution. A classification between unaided and aided teachers does not seem to be reasonable classification as they travel in the same boat for the same purpose. Here, another point to be noted is that members of non-teaching staff of an educational institution are entitled to the gratuity benefit, but teachers are excluded from the same, though, they are working in the same institution. Thus, the teachers working in purely private educational institutions, who are large in number in our country, will be deprived of this gratuity benefit unless these educational institutions extend this benefit to them also. Now, ball is in the court of legislatures. Thus, the attention of the legislature is invited to the matter raised in this judgement for an appropriate legislation. If they are really interested in protecting the teachers, they have to take necessary steps without delay to safeguard the interest of the teachers by bringing an amendment to the Act so as to include these aggrieved people.”
Looking at the information above, I am really confused about the applicability of this act to teachers in pvt. institutes .
Pls. guide me about :
1. What is the exact status of pvt. colleges' teachers under this act? Is this act uniformly applicable to both govt. & private sector teachers irrespective of their wages?
2. If we wish to extend the gratuity benefit to our teachers (even if its not compulsory under the act), then can we frame our own policy in this regard or strict conformation to Gratuity Act is required, because we would like to reach a solution that is acceptable to both the faculty and the top management?
3. Besides, is there any wage or basic pay limit for doling out gratuity benefits because again in this regard, I received very contradictory information, that is:
a.“The Act is not applicable to apprentices and persons holding a post under the Central or State government who are governed by any other rule providing for payment of gratuity.
The Act covers all employees who draw upto Rs. 3500 per month as wages. The maximum gratuity payable is Rs 3,50,000.”
b.“The Act enforces the payment of gratuity, as a statutory retiral benefit. Every employee irrespective of his wages is entitled to receive gratuity if he has rendered continuous service of 5 or more yrs.”
Pls. guide which of the above statements ‘a or b’ is valid?
4. Can a pvt. institute teacher with last drawn wages 1 L p.m. claim gratuity benefits as a matter of right or the decision for provision of gratuity to such an employee rests with the employer alone?
Looking forward to your valuable inputs.