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N. NAGARESH
K. R. Unnikrishnan, S/o. Raman – Appellant
Versus
State of Kerala, Rep. by the Principal Secretary Industries, Electronics and IT Department – Respondent
JUDGMENT :
N. Nagaresh, J.
Petitioners are retired non-managerial employees of Malabar Cements Limited, Palakkad. The petitioners seek to direct the respondents to allow revised Gratuity to them.
2. The petitioners state that though the Malabar Cements Limited, Palakkad is in the A Grade category among the Public Sector Undertakings, the wages paid to the non-managerial employees in the Company are only half of the salaries drawn by the non-managerial employees in other A Grade Public Sector Undertakings. The wage structure in the Malabar Cements Limited is governed by the Central Board Settlements reached at National level between Cement Manufacturers Associations and National Trade Unions.
3. The salary structure under Cement Wage Board Award comprises various components, such as Basic pay, Variable Dearness Allowance ((VDA), Fixed Dearness Allowance (FDA) and a group of other allowances, which constitutes 35% of the total pay. These allowances will be excluded while determining the Gratuity amount. Therefore, the non-managerial employees of the Company get a very low amount of Gratuity compared to employees of other Public Sector Undertakings, where the salary elements to be exclude
The Gratuity Act provides overriding rights for gratuity claims that cannot be denied unless specifically exempted by law, even when alternative welfare benefits exist.
The office memorandum dated 26.11.2008 is binding on the Corporation and constitutes an agreement under Section 4(5) of the Payment of Gratuity Act, 1972.
The Payment of Gratuity Act, 1972 overrides contractual agreements, ensuring gratuity eligibility is determined by statutory provisions rather than settlement terms.
Employees are entitled to gratuity benefits as per the terms of their employment scheme, which can exceed statutory limits under the Payment of Gratuity Act.
The Office Memorandum dated 26.11.2008 is advisory and does not impose a binding obligation on public sector undertakings to pay enhanced gratuity prior to the amendment of the Gratuity Act.
State government employees are excluded from the Payment of Gratuity Act, and their gratuity entitlement is regulated by separate Pension Rules, confirming a ceiling limit of Rs. 4 lakh.
Gratuity under the Payment of Gratuity Act cannot be withheld on the basis of dues unless misconduct is established prior to retirement.
The main legal point established in the judgment is that the Payment of Gratuity Act, 1972 applies to the respondent-Corporation and its employees, and the Act's provisions have an overriding effect ....
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