Applicability of the Payment of Gratuity Act to Schools
The Payment of Gratuity Act was held applicable to schools, and the non-teaching staff are entitled to receive gratuity. Prior to the amendment to section 2(e) of the PG Act, only teachers were considered ineligible to receive gratuity under the PG Act, whereas non-teaching staff were eligible. Section 2(e) of the Payment of Gratuity Act, which defines the term "employee," was amended by Act 27 of 2009. This amendment came into effect on 3-4-1997. Post-amendment, section 2(e) now reads 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 connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop, or other establishment to which this Act applies. However, this definition excludes individuals holding a post under the Central Government or a State Government and governed by any other Act or rules providing for gratuity payments.
The purpose of this amendment was to include teachers within the scope of the Payment of Gratuity Act. The effective date of this amendment is significant, as on 3-4-1997, the Honourable Supreme Court of India ruled that teachers were not considered employees as defined under the Payment of Gratuity Act and, therefore, not entitled to gratuity.
Please note the interpretation of the phrase "in any kind of work, manual or otherwise" in the definition, which encompasses teaching activities. However, teachers are not eligible for gratuity under the Payment of Gratuity Act if they hold a position under the Central Government or a State Government or are covered by other Acts or rules governing gratuity.
Regards