P&H HC Upholds ₹45,071 Gratuity Top-Up Against Canara Bank For 31-Year Commission-Based Deposit Collector

Respondent No. 1 worked as a Deposit Collector/NND Agent from 15 December 1988 until 4 May 2020, on a commission basis, and was not a regular bank employee.

After the Bank paid him ₹2,92,956 as gratuity, he sought a higher amount under the Payment of Gratuity Act, 1972. The Controlling Authority calculated gratuity at ₹3,38,027 using an average monthly commission of ₹18,900.45, and directed payment of the ₹45,071 balance with interest. The Appellate Authority upheld that order, and the Single Judge dismissed the Bank’s writ petition.

Section 4 of the Payment of Gratuity Act, 1972 provides for gratuity upon termination of employment after at least five years of continuous service, subject to the statutory conditions; the Court held that entitlement does not depend on whether the employee is permanent, casual, or paid by commission.

In Indian Banks Association v. Workmen of Syndicate Bank, 2001 (3) SCC 36, the Supreme Court recognized Deposit Collectors as workmen for industrial-dispute purposes and upheld gratuity and other benefits while declining to equate them with regular employees for absorption, pay scales, and allowances.

The Bank’s Circular No. 160/2005 dated 23 June 2005 prescribed calculation by reference to the average commission earned during the 12 months immediately preceding cessation of engagement.

Respondent No. 1 had served for over 31 years, and his commission-based engagement and lack of regular-employee status did not remove his entitlement to gratuity under Section 4.

The Bank’s prior award-based payment did not prevent the statutory authorities from determining the gratuity payable under the Act.

On computation, the Bank itself had applied its circular’s 12-month average—₹18,900.45—in calculating the gratuity it paid. Because commission could fluctuate monthly, the Court considered that average a representative measure and rejected the Bank’s proposed use of the final month’s commission of ₹14,312.

It therefore found no basis to disturb the authorities’ concurrent findings or the Single Judge’s decision.

There was no order as to costs, and any pending miscellaneous applications were disposed of.