Are Casual Workers in Seasonal Factories Entitled to Gratuity Without 240 Days of Work?

My factory is a sugar factory where casual employees work during the sugar factory's operation, i.e., from December to March. The temporary/seasonal employees hired during this period are paid gratuity at a rate of 7 days per year. However, casual employees are only paid if they work for 240 days in a year; otherwise, they are not paid.

Are casual employees eligible for gratuity at the rate of 7 days per year like seasonal employees if they have not completed 240 days of work?

As per my understanding, you will have both regular employees as well as seasonal workers. The latter are engaged only during that season. If your casual workers have been employed regularly throughout the year, they should have 240 days attendance in order to claim gratuity. Whereas, those casual workers who are normally engaged during the seasons only can claim gratuity if they have worked for 75% of the total working days in each season.

Definition of Employee Under PGA 1972

First of all, let it be clarified that an employee under the PGA 1972 means and includes any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied.

Eligibility of Temporary Workers for Gratuity

The term "temporary worker" is a nomenclature adopted by the establishment, and being temporary cannot be the factor to decide on the eligibility of gratuity as long as the condition of continuous service is met. As per Section 2A (3), if the employee works for 75% of the total working days in each season, that amounts to continuous service for that period, and hence they are eligible to receive gratuity.

Kerala High Court Decision

However, you may see the following Kerala High Court decision and consider the contrary decision. It was held that any workman engaged for work on a temporary basis according to the availability of work is not an "employee" within the meaning of section 2(e). See K. Velukutty Achary v. Harrison Malayalam Ltd. (1993) 66 FLR 423 (Ker) (DB).

Dear friends, first of all, I thank our friend Mr. Bharath for inviting me to participate in the ongoing discussion regarding the eligibility of casual labor for gratuity under the Payment of Gratuity Act, 1972. Although the question is limited to casual labor engaged during specific seasons only, I have carefully considered the views of our learned friends M/S Madhu and KK!HR in light of various judgments within my knowledge, such as Surendrakumar Verma v. The C.G.I.T cum Labor Court [1980 SCC (4) 443], Jeevanlal Ltd v. A.A under the P.G Act [AIR 1984 SC 1842], Keshav Chand v. the State of Punjab [AIR 1988 P&H 265], K.Velukkutty Achari v. Harrison Malayalam Ltd [1993 66 FLR 423 (Ker)], Municipal Council, Panna v. C.A and Another [H.C, M.P (2002-2-LLN-609], and Commissioner, Idappadi Municipality v. Joint Commissioner of Labor, Coimbatore [2014 II CLR 36 - Madras H.C].

Upon analyzing the definition of the term "employee" under section 2(e) of the PG Act, 1972, it is evident that the use of the phrase "any person" excludes only an apprentice, thereby implying that all employees, including casual and temporary workers, are entitled to gratuity upon the termination of their employment if they have provided continuous service as defined under section 2-A of the Act. While there are judgments that differentiate between the terms "employed" and "engaged" based on strict etymological interpretations, I believe that such interpretations do not align with a liberal approach when dealing with beneficial legislation like the PG Act, 1972.

Following the ratio decidendi of the full bench judgment of the Punjab & Haryana H.C cited above, the Himachal Pradesh High Court ruled that the service period a worker completes in both daily wage and regular posts should be considered for gratuity payment purposes {HPSEB v. Balak Ram [2008(2)LLJ 8]}. It is important to note that the circumstances in the Harrison Malayalam Case mentioned are distinct.

Inevitably, the conclusion is that when a casual laborer fulfills the minimum qualifying service requirement of not less than 5 years with the same employer, they become eligible and entitled to gratuity for the years during which they have provided continuous service as per section 2-A upon the termination of their employment.

Sincerely