Service rendered as daily-wager also to be considered for calculating gratuity

Ahmedabad Municipal Corporation – Petitioner


Kantibai Haribhai and 2 others – Respondents

Facts of the Case:
Respondents served the petitioner as workman, and as they retired, alongside other dues were also paid gratuity by the petitioner-employer. But this amount of gratuity was derived at after excluding the period when the respondent worked as a daily-wager, as also the period of break in service.

Respondents raised a dispute regarding the amount of gratuity before the Controlling Authority. They contended that entire period of their service right from the date of joining, (as mentioned in the pay slip, including the period of service as daily-wager) should be accounted for while calculating gratuity. Also that, as there was no express order as regards their break in service and hence, that period cannot be treated as break in service and gratuity should be paid for that period also.

The Controlling Authority, after considering the facts held that while calculating gratuity, even the service rendered in capacity of a daily wager should be taken into account. Also that, as there has been no express mention of break in service1 and gratuity needs to be paid for that period too.

Thus, it granted the claim of respondents, but passed no order as to the interest accrued on the amount of unpaid gratuity. Respondents thus approached the Appellate Authority which while upholding the Controlling Authority’s decision, granted the claim for interest @ 10 percent.

Petitioner challenged this order before Gujarat High Court.

Hon’ble High Court as it upheld the order of the Controlling Authority and stated that, the Appellate Authority too has rightly directed payment of interest on unpaid amount, it being a statutory compliance.

Source: Labour Law Reporter, Pg. No. 712, Gujarat High Court, July 2010.

Hon’ble Karnataka High Court in case of Bangalore Metropolitan Transport Corporation, Bangalore v. Deputy Labour Commissioner and Appellate Authority, [Company Law Reporter, Volume II, Pg. No. 788, 2009] held that, every period of break in service that does not qualify for payment of gratuity, necessarily should be evidenced by express order.