Is Gratuity Applicable for Retiring Fishery Employees in Uttar Pradesh? Seeking Advice

Secretary of Fisheries, Government of Uttar Pradesh

Through its order dated 20 April 1982, the government established Fish Farmer Development Agencies registered under the Societies Registration Act, 1860, in 17 districts separately and sanctioned 11 posts with around 19 vacancies in each agency. Against the 19 sanctioned vacancies, the agency employed 19 persons in the Lucknow district, with the following nature of employment:

1. Four employees were recruited directly by the agency through the employment exchange.
2. Fifteen employees were recruited by the agency on deputation from the state's Fisheries Department.

Currently, the four employees recruited by the agency are retiring on superannuation. Kindly advise whether the Gratuity Act is applicable to the agency or if the four employees are entitled to gratuity under the Gratuity Act 1972.

The Central Government has already notified the societies registered under the Societies Registration Act, 1860, as establishments under sec. 1(3)(c) of the Payment of Gratuity Act, 1972. Therefore, the four employees of the Society are eligible to receive gratuity under the Act upon their retirement.

The Department of Fisheries denies the applicability of the Gratuity Act because they do not consider employees appointed on deputation when computing the limit of employees under the said act. I contend that, even after the posts have been sanctioned by the government itself, the department is still hiring people on deputation for many years instead of appointing them on a regular basis. This seems to be a strategy to avoid the liability of payment of gratuity, which shall arise once the act becomes applicable. Kindly suggest a course of action.

The objective and purpose behind forming a government institution as a society under the Societies Registration Act is to designate and run it as an autonomous body, with its own rules and regulations for achieving the objectives for which it was created, by facilitating financial and administrative flexibility. Filling up certain sanctioned posts of the society by deputation is either a temporary measure in its formative period or a permanent practice for the limited purpose of facilitating smooth coordination between the respective administrative department of the government and the society. In fact, appointment by deputation is a costlier affair as the society has to proportionately contribute to the leave and terminal benefits of the deputed employees for their tenure of services in the society. Therefore, their services cannot be treated as honorary, so as to take them out of the staff strength of the society. The refusal to include them, especially when their deputation is against the original posts of the society for a very long period for the purpose of paying gratuity to the eligible society employees, is based on the wrong premise. First, bring this to the notice of the Governing Committee. If there is still no favorable response, it is better to file claims for gratuity before the respective Controlling Authorities under the Payment of Gratuity Act, 1972 after their retirement on superannuation.

Regards

Eligibility for Gratuity for Employees of Fish Farmer Development Agency

A person who joined the service in July 1985 at the Fish Farmer Development Agency, Raibareli, a society of the U.P. Fisheries Department registered under the Societies Registration Act of 1860, superannuated in July 2016.

The Department of Fisheries, Govt. of U.P., pays gratuity to employees of its society (Fish Farmer Development Agency, Raibareli) from the date of notification covering the society under the Gratuity Act, i.e., September 1996, to the date of superannuation in July 2016.

Please provide your opinion on whether the above employee of the society is eligible for gratuity from the date of joining in July 1985 to the date of superannuation in July 2016 or from the date of notification in September 1996 to the date of superannuation in July 2016.

With Regards,

RAJENDRA PRASAD

Dear Rajendra Prasad, whenever an establishment is brought under the Payment of Gratuity Act, 1972 by means of a notification under Section 1(3)(c) of the Act, the provisions of the Act become applicable to the establishment with effect from the very date of such notification only. As such, all the employees in the services of the establishment on the date of notification become eligible for gratuity under the Act upon the termination of their employment. Legally, logically, and necessarily, the continuous service rendered by such employees in the establishment prior to the date of notification should also be taken into account for the purpose of gratuity if the termination of their employment happens subsequently. Of course, those employees who retired or resigned from the services of such an establishment prior to the date of notification are not eligible for gratuity as the Act was not applicable to it during their tenure of employment. The situation is similar to that of an establishment not covered by the Payment of Gratuity Act because of the reason of having less than 10 employees on its roll, coming under the purview of the Act by virtue of the subsequent increase in the threshold of the numerical strength of the employees.

Any notification by means of a Government Order running counter to the provisions of a law passed by the legislature would be null and void in judicial scrutiny.