your understanding is correct employer cannot terminate services of employee on his disablement
however if employee voluntarily resigns from service he cannot claim gratuity
Gratuity Act - Section 4(1)(c)
Gratuity Act, 1972 Section 4. Payment of gratuity. (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-- (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: I understood that as per the above gratuity act, the employment has to be terminated by the employer in order to claim the gratuity under Section 4(1)(©) for disablement due to accident or disease even if the employee not completed 5 years of service. But I found in the below legal references that an employer cannot terminate an employee because he has acquired disability. Ref-1: SC order decided in 2003 In a Supreme Court judgment, decided in 2003, the Court held that terminating an employee because he has acquired disability and because he is not fit for service in a department is not valid (https://www.canefoundation.org/termination-of-employment-on-acquiring-disability-is-invalid/) Ref-2. Section(20) of PWD act, 2016 -Non-discrimination in employment Provided that, if an employee after acquiring disability is not suitable for the post he was holding, shall be shifted to some other post with the same pay scale and service benefits: Provided further that if it is not possible to adjust the employee against any post, he may be kept on a supernumerary post until a suitable post is available or he attains the age of superannuation, whichever is earlier. Query: So, I understood that the service of an employee can’t be terminated by the employer who is not able to continue his service on his disablement due to accident or disease. And the employee get relieved only by his resignation from the company. Please confirm or clarify my query.
Asked 2 years ago in Labour
12 Answers
The services of an employee can't be terminated by the employer if he is disabled due to accident or disease and the employee gets relieved only by his (a) resignation (b) superannuation/retirement (3) death.
The resignation of the job by the employee is a voluntary act and the termination by the employer would be as per law and rules.
Thus if the employee has tendered resignation due to any reason then the employer can very well accept the resignation and relieve the employee from the job, in that case the employee shall not be entitled for payment of gratuity payment if the qualifying service has not been completed by the employee as on the last date of working.
In such condition if employee is not able to perform his duties he will be relieved by company after payment of compensation and other rights
Dear Client,
The act of an employee resigning from their job is considered a voluntary decision, while an employer's termination of an employee is governed by applicable laws and rules. If an employee chooses to submit their resignation for any reason, the employer has the right to accept it and subsequently relieve the employee from their position. In such a scenario, if the employee has not completed the required qualifying service by their last date of work, they would not be entitled to receive gratuity payment.
On April 15, 2020, the Hon’ble Supreme Court of India in the case of Rajasthan State Transport Corporation Ltd. & ors. V. Smt. Mohani Devi & anr.[1] determined the scope of payment of gratuity upon termination of employment. The above decision of the Hon’ble Supreme Court clears the air on understanding of resignation covered under the term ‘termination’ of an employee which has not been defined under the Payment of Gratuity Act, 1972. https://ssrana.in/articles/sc-gratuity-payment-on-termination-of-employment/
Asked 2 years ago
- Section 4(1)(b) of the Payment of Gratuity Act, 1972 provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well.
- Widening the scope of the word ‘termination’ the supreme Court observed that termination would include resignation as well and hence the person shall be provided with all retiral benefits as to be provided on termination.
Section 4(1)(c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: So as per the Supreme Court order resignation is also covered under the "Termination of the employment" https://ssrana.in/articles/sc-gratuity-payment-on-termination-of-employment/
Asked 2 years ago
The Supreme Court have accepted the contention advanced by the respondent- Mohani Devi, widow of the deceased employee of the appellant- RSRTC that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well.
THROUGH the judgement of the case – Rajasthan State Road Transport Corporation Ltd. & Others v. Smt. Mohani Devi & Another, delivered on April 15, 2020, Justice R. Banumathi and Justice A.S. Bopanna at the Supreme Court have accepted the contention advanced by the respondent- Mohani Devi, widow of the deceased employee of the appellant- RSRTC, that section 4(1)(b) of the Payment of Gratuity Act, 1972, provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well. The apex court has clarified it further, that in that view, if the gratuity amount has not been paid to the respondent’s husband, the liability to pay the same would subsist and the widow Mohani Devi will be entitled to receive the same in accordance with the provisions of the Act.
Section 4(1)(b) of the Payment of Gratuity Act, 1972 provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well.
The Supreme Court have accepted the contention advanced by the respondent- Mohani Devi, widow of the deceased employee of the appellant- RSRTC that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well.
Yes it includes resignation also after servicing continuous period. Only waiver of continuous period is death by accident or disablement as stated in the said judgement
As per SC judgment resignation is also treated as termination of employment
The Payment of Gratuity Act, 1972 provides that an employee who has served for at least 5 years is eligible to receive gratuity, even if they resign. This is because the term "termination of employment" in Section 4(1)(b) of the Act includes resignation.
The Supreme Court recently upheld this interpretation of the Act in a case involving the Rajasthan State Road Transport Corporation (RSRTC). The widow of a deceased RSRTC employee had filed a claim for gratuity, arguing that her husband had been eligible for it because he had served for more than 5 years before resigning. The RSRTC argued that gratuity was not payable in cases of resignation.
The Supreme Court rejected the RSRTC's argument, holding that the term "termination of employment" in the Act is broad enough to include resignation. The Court also noted that the purpose of the Act is to provide financial assistance to employees who have served for a long period of time, regardless of the reason for their termination of employment.
This decision is a significant victory for employees who resign after serving for at least 5 years. It ensures that they will be able to receive gratuity, which can provide them with much-needed financial support during their retirement or other life events
Dear Client,
You've done a good job summarizing the legal references. Based on the information you've provided:
The Gratuity Act, 1972, does indeed state that gratuity is payable to an employee upon the termination of employment due to death or disablement due to accident or disease, and the requirement for continuous service of five years is waived in such cases.
The Supreme Court judgment you referenced (Ref-1) suggests that terminating an employee solely because they have acquired a disability and are not fit for service in a particular department is not valid. This aligns with principles of non-discrimination and protection of disabled individuals.
The reference to Section 20 of the Persons with Disabilities (PWD) Act, 2016 (Ref-2) reinforces the idea of non-discrimination in employment for disabled individuals. The PWD Act emphasizes that employees with disabilities should not be terminated solely on the basis of disability. It also highlights the need to provide reasonable accommodations, adjust the employee to a suitable post with the same pay scale and benefits, and even consider supernumerary positions if necessary.
Based on these references, your understanding is generally accurate:
Termination solely due to an employee's disability, especially if they are not fit for a specific post or department, could be seen as discriminatory and invalid under the PWD Act and related legal principles.
If an employee acquires a disability and becomes unfit for their current role, employers are expected to provide reasonable accommodations or find an alternative suitable role within the organization.
However, it's important to remember that the specific circumstances of each case can impact how these legal principles are applied.