Teacher not “employee” under Payment of Gratuity Act, Supreme Court

The Supreme Court today held that a teacher is not an ‘employee’ as per the provisions of the Payment of Gratuity Act, 1972 (Act) and is therefore not entitled to gratuity under the Act..The appeal which brought forth this question was filed by the Birla Institute of Technology (BIT/ Appellant) against a judgment of a Division Bench of the Jharkhand High Court..The Respondent in the case was an Assistant Professor at the BIT and superannuated in November 2011. After retiring from the post, the Respondent sought payment of gratuity by the Appellant in conformity with the Payment of Gratuity Act, 1972. However, the same was declined by the Appellant..Representation in this regard was made by the Respondent before the Controlling Authority under the Act. The Controlling Authority ruled in favour of the teacher and directed the Appellant to pay gratuity along with interest to the Respondent. Appeal against this order was dismissed by the Appellate body and later by the Single-judge Bench and Division Bench of the High Court..This prompted the current Special Leave Petition which was heard by a Bench of Justices Abhay Manohar Sapre and Indu Malhotra..The Court proceeded to place reliance on the judgment in the case of Ahmadabad Pvt. Primary Teachers Association v. Administrative Officer and Others [(2004) 1 SCC 755]..In the aforementioned case, the Court had held that a teacher is not an employee under Section 2(e) of the Act and is, therefore, not entitled to claim gratuity under the Act. In a detailed rationale given by the Court in that case, the meaning of the words “skilled”, “semi-skilled”, and “unskilled” was examined..The Court had noted that the definition in the Payment of Gratuity Act did not have the scope to include teachers in its purview unlike the definition of an employee adopted in the Employees’ Provident Funds Act..Placing reliance on that Judgment, the Court in the instant case held that BIT was not liable to pay gratuity to the Respondent under the Act since that the Respondent was not covered under the definition of an employee..It, therefore, set aside the High Court’s judgment and allowed BIT’s appeal..Read the Judgment: