Gratuity – Cannot be Denied on Technical Grounds

There cannot be any two views that the Payment of Gratuity Act, 1972 is a beneficial piece of legislation enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments as a measure of social security. The significance of the legislation lies in the acceptance of the principle of payment of gratuity as a compulsory statutory retiral benefit. The Act accepts, as a principle, compulsory payment of gratuity as a social security measure to wage earning population in industries, factories and establishments. The main purpose and concept of gratuity is to provide for terminal benefits to a workman upon his superannuation, or on his retirement or resignation, or on his death or disablement due to accident or disease.

        The Payment of Gratuity Act, 1972 being thus a welfare legislation meant for the benefit of the employees who serve their employer for a long time. It would be the duty of the employer to pay gratuity amount to the employee rather than denying the benefit on some technical ground.        

Applying the rule of beneficent construction, the provisions of the Payment of Gratuity Act, 1972 are to be interpreted liberally so as to give it a wide meaning rather a restrictive meaning which may negate the very object of the enactment. A beneficial legislation, it is well settled, as to be construed in its correct perspective so as to fructify the legislative intent underlying its enactment. Nagar Nigam Gorakhpur v. Suresh Pandey, 2020 (1) AWC 810.

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Filed under Denial on Technical Grounds, Employment Law, Payment of Gratuity Act

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