THE Supreme Court has ruled that gratuity is a statutory right of employees which cannot be denied to them on the ground that they are being given provident fund and pension benefits.
The apex court said no establishment can deny gratuity benefit to an employee as the statutory provision enacted by Parliament cannot be “defeated” by introduction of any “contract or instrument”.
"The provisions of the Act (Payment of Gratuity Act, 1972) prevail over all other enactment or instrument or contract so far as the payment of gratuity is concerned. The right to receive gratuity under the provisions of the Act cannot be defeated by any instrument or contract,” a bench of justices B Sudershan Reddy and R M Lodha said in a judgement.
The bench said the provision of gratuity can be waived by the management only under exceptional circumstances with the prior approval of the government. Such a waiver can be availed of provided the government takes the view that pensionary and other retiral benefits are more favourable than gratuity benefits, the apex court said.
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