The Supreme Court examined the issue of payment of gratuity to an Assistant Professor in the matter of Birla Institute of Education vs. State of Jharkhand1. In order to determine this issue, the Apex Court relied on the matter of Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer and Others2 , where the question that came up for consideration was whether a 'Teacher' could be regarded as an "employee" under Section 2(e) of the Payment of Gratuity Act, 1972 ("the Act"), and, if so, whether a teacher could be entitled to claim gratuity from his/her employer in accordance with the provisions of the Act. It was held that – "a teacher is not an employee, as defined under Section 2(e) of the Act, and hence, he/she is not entitled to claim any gratuity amount from his employer under the Act".

The Court observed that the term 'employee' has been defined to include any 'person who is skilled, semi-skilled and unskilled'. It was held that since teachers can be both skilled and unskilled, they cannot be considered as employees. The Court went on to define the term 'skilled work' as work where the employee is required to use his/her judgment and entails dealing with the public, analyzing facts and figures, or working on abstract ideas with a high level of complexity. Whereas, semi-skilled work requires some amount of alertness and attention such as, inspecting machinery, etc. On the other hand, unskilled work requires little or no judgment, and involves simple tasks that can be learned quickly on the job. An example of unskilled work could be primary school teachers who are generally untrained, and therefore, do neither "managerial" nor "administrative" work.

In the Birla case, the Supreme Court allowed the appeal and held that the Assistant Professor was not eligible to claim gratuity from the Educational Institute under the Act. While dismissing the judgment in the Ahmadabad Pvt. Primary Teachers Association case, the Apex Court of India laid emphasis on the meaning of employees under the Act and stated that not only primary teachers but all teachers (and professors) fall outside the purview of 'employees' for the purpose of the Act. It further stated that High Court in the Ahmadabad Pvt. Primary Teachers Association matter had not interpreted the word 'teacher' in its literal sense.

It is interesting to note that even though the Supreme Court placed reliance on the matter of Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer and Others, where a distinction was clearly made between the various categories of teachers i.e., primary teachers, etc. The High Court had made it clear that only teachers of primary classes would not fall within the purview of 'employees' under the Act. However, in the Birla case, the Supreme Court has dispensed with such distinctions and has disentitled all teachers from claiming gratuity under the Act.

By Ms. Rianna Lobo and Ms. Priya Singh


1 Civil Appeal No.2530 of 2012

2 (2004) 1 SCC 755

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.