Pre-1997 service counts only toward eligibility, not teachers’ gratuity calculation.

The petitioner challenged orders of the Controlling Authority and Appellate Authority determining gratuity payable to a teacher who had served from 1985 until superannuation in 2018.

The authorities calculated gratuity by reference to the employee’s continuous service from 1985 and determined the relevant basic wages as Rs. 26,110 per month.

The petitioner argued that the Payment of Gratuity Act, 1972 became applicable to teachers only from 3 April 1997, and disputed the wage calculation, including the treatment of dearness allowance and ex-gratia payments.

The employee relied on Independent Schools’ Federation of India to support counting the entire service period.

Whether service rendered before 3 April 1997 could be included in calculating the amount of gratuity payable to a teacher, where the Act became applicable to teachers from that date.

Whether the authorities’ determination of the employee’s basic wages for gratuity purposes required interference.

The Payment of Gratuity Act, 1972 was extended to teachers through the 2009 amendment, with effect from 3 April 1997.

In Independent Schools’ Federation of India (2022), the Supreme Court held that the Act applies to teachers whose service terminates after its enforcement date and who satisfy the minimum service requirement; service before that date may count towards the five-year eligibility condition, but the Act’s application to teachers begins on the specified enforcement date.

Section 4(2) requires gratuity to be calculated by reference to the employee’s last-drawn wages, which include basic emoluments and dearness allowance as described in the authorities’ report.

The Court accepted that, under Independent Schools’ Federation of India, pre-3 April 1997 service could be considered to establish the qualifying service requirement, but did not make the Act’s gratuity benefit applicable to teachers for the earlier period.

Since the teacher’s entitlement under the Act arose from its application to teachers in 1997, the authorities’ calculation from the 1985 date of joining required modification.

On wages, the Court found no reason to interfere with the authorities’ determination of basic pay, which it held was in accordance with law.

The authorities’ determination of basic pay was left undisturbed.