SC on What is “Continuous Service” for Claim of Gratuity?


March 27, 2018

Case name: Netram Sahu v. State of Chhatissgarh


Date of Judgement: March 23, 2018

The question, which arose in the instant case was whether the appellant can be held to have rendered qualified service, i.e., continuous service as specified in Section 2(e) read with Section 2A of Payment of Gratuity Act  so as to make him eligible to claim gratuity, as provided under the Act, from the State.

Section 2A of Payment of Gratuity Act defined “continuous service”.

In the case the appellant employee had in all rendered 25 years and 3 months of service (22 years and 1 month as daily wager and 3 years and 2 months as regular work charge employee). However, the Appellant was not paid the gratuity amount by the State after his retirement on the ground that the appellant could not be held eligible to claim the gratuity amount because out of the total period of 25 years of his service, he worked 22 years as daily wager and only 3 years as regular employee.

The Supreme Court in view of the facts and circumstances of the case directed the State to release the payment of gratuity amount and made the following observations:

  • That the Appellant had actually rendered the service for a period of 25 years. That having regularized the services, the appellant became entitled to claim its benefit for counting the period of 22 years regardless of the post and the capacity on which he worked for 22 years.
  • That there is no provision in the Act which disentitled the appellant from claiming the gratuity or prohibits the appellant from taking benefit of his long and continuous period of 22 years of service, which was rendered by him prior to his regularization for calculating his continuous service of five years.
  • That in the circumstances of the case the Appellant is denied relief then the same would be travesty of justice. The question as to from which date such services were regularized was of no significance for calculating the total length of service for claiming gratuity amount once the services were regularized by the State.

Take away- The Supreme Court in the case settles the legal proposition that while determining “continuous service” under Section 2A of Payment of Gratuity Act , the question whether the services were regularized or not is of no significance.

The entire case can be accessed here.