Does “termination of employment” include resignation under Section 4(1)?
Dear Sir/Madam, I humbly request your kind guidance/clarifications on the following queries: In Rajasthan State Road Transport Corporation Ltd. & Ors. v. Smt. Mohani Devi & Anr., decided on 15 April 2020, the Supreme Court held that the expression “termination of employment” under Section 4(1) of the Gratuity Act, 1972 is of wide import and includes resignation. As per this judgment, does the order also apply to Section 4(1)(a), (b), and (c)? Please confirm my understanding. Is a gratuity claim under Section 4(1)(c) — death or disablement due to accident or disease — applicable in cases of resignation by the employee, or can this provision be invoked only when the employer terminates the employee from service?
Dear Client, The Supreme Court has clarified that under Section 4(1) of the Payment of Gratuity Act, 1972, the phrase “termination of employment” is broad enough to cover resignation, so gratuity is payable on resignation if the five years’ qualifying service is met; however, the special clauses in Section 4(1)(a), (b), and (c) are distinct carve-outs that waive the five-year condition only in cases of superannuation, retirement, death, or disablement, and therefore a resignation cannot be brought under Section 4(1)(c) that provision applies strictly where employment ends due to death or disablement, not where the employee voluntarily resigns. I hope this answer helps. For any further queries, please do not hesitate to contact us. Thank You.
In RSRTC v. Mohani Devi (2020), the Supreme Court held that “termination of employment” under Section 4(1) of the Gratuity Act includes resignation, making gratuity payable under Section 4(1)(b). However, Section 4(1)(c) applies only where service ends due to death or disablement, not resignation. Thus, resignation cannot invoke Section 4(1)(c). For further legal assistance contact us on our helpline number.
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