Calculation Of Gratuity For Deputation Service Separately Is Impermissible In Law: Kerala HC
The Kerala High Court has observed that there is no provision to calculate separate gratuity amounts for parent employer service and deputation service and calculation of gratuity for deputation service separately is impermissible in law.
The Bench of Justice MA Abdul Hakhim observed, “In view of the said provisions, the monthly salary which is relevant for calculating gratuity is the salary which was drawn by the employee immediately before his termination of employment. The total gratuity payable to the employee has to be calculated based on the monthly salary last drawn by the employee immediately preceding his termination, irrespective of the deputation service of the employee. There is no provision to calculate separate gratuity amounts for parent employer service and deputation service. Calculation of gratuity for deputation service separately is impermissible in law.”
Senior Advocate P. Sreekumar appeared for the Petitioner whereas Advocate Vipin P Varghese appeared for the Respondents.
The Petitioner, who was a retired employee of Kerala Shipping And Inland Navigation Corporation Ltd (‘KSINCL’)-Respondent, was aggrieved that his full retirement benefits were not paid on account of the disputes with respect to the contributions to be made by the Respondents under whom he worked on deputation.
There was no dispute concerning the periods of service of the petitioner with the Respondents. It was submitted that the dispute was essentially with respect to the monthly salary based on which the gratuity was to be calculated for the period of deputation with the second respondent.
The Court referred to Section 4 of the Payment of Gratuity Act, 1972 and said, “Once total gratuity payable to the employee is calculated by the Parent employer based on the monthly salary last drawn by the employee immediately preceding his termination, the Parent Employer has every right to seek contributions from the employers with whom the employee had worked on deputation, for the period of deputation. The Employer which employed an employee on deputation cannot contend that the gratuity for the period of deputation is to be calculated based on the salary last drawn by the employee from such employer.”
The Court held that if the employer who availed the service of the employee on deputation is allowed to take a stand that he is liable to pay gratuity based on the salary last drawn by the petitioner from him, there would be a deficit in the total gratuity amount payable to the employee, which would be in violation of the provisions of the Payment Gratuity Act. “As per Section 4 of the Payment of Gratuity Act, the employee is entitled to get his gratuity calculated based on his last drawn wages immediately before termination irrespective of whether he worked on deputation or not. The Parent Employer is not liable to make good the deficit amount of gratuity on account of the lesser payment by the employer who availed service on deputation.”, the Court held.
Accordingly, the writ petition was disposed of and the Court directed the Respondents to fix the total amount of gratuity payable to the petitioner based on the monthly salary of Rs.27,991/- which was last drawn salary by the Petitioner before the retirement.
Cause Title: S Kamaladharan v. Managing Director, KSINCL and Ors. (Neutral Citation:2024:KER:37600)
Appearances:
Petitioner: Senior Advocate P. Sreekumar, Advocates K. Arjun Venugopal, Aswin Kumar M J and Helen P.A.
Respondents: Advocates Vipin P Varghese, Santhosh Mathew, P.A. Ahamed, Naveen. T., Adarsh Mathew, Merline Mathew, Celine John, Mehnaz P. Mohammed and Anirudh G. Kamath.
