Gratuity cannot be denied for refusing to accept transfer: Court

Can a worker refuse to accept a transfer order issued by the management, and whether such a refusal could be termed as ‘non-service'?

Answering this query while hearing a writ petition recently, the Madras High Court referred to the Payment of Gratuity Act (Section 2A) where the term ‘continuous service' had been defined. Under the said definition, which was incorporated in the law under an amendment brought into force by Act 26 of 1984, both ‘continuous' service and ‘discontinuous' service were included.

It was only in cases where absence from duty without leave for which a specific order for break in service was passed by the employer, in accordance with the standing order, the period could be treated as ‘discontinuous' service.

According to the writ petitioner, Addison Paints & Chemicals Ltd, Sembiam, Chennai, S. Nagarajan was appointed as chemist from May 25, 1962, and was superannuated on June 11, 2002. On July 9, 2002, the petitioner informed him that he was not entitled for gratuity for the period July 25, 1988 to March 6, 1996. While in service, he was transferred on July 25, 1988, from the post of chemist, which was a workman category to post of sales representative, which was a non-workman category. He did not accept the offer whereafter an industrial dispute was raised regarding the alleged illegal transfer. The Labour Court by an award dated February 7, 1992 held that the transfer was not due to any mala fide action, but it was to meet the exigencies in the department. It was the employee (R-3) who refused to accept the transfer, and hence, the management was not liable to pay any wages, the Labour Court ruled.

R-3 sent an application to the Controlling Authority (R-1) for payment of gratuity. The petitioner contended that merely because the employer-employee relationship was not snapped, that period could not be recognised for purpose of paying gratuity. R-1 rejected the stand of the petitioner. R-1 held that the term ‘continuous' service was defined u/s 2A, and non-employment period of R-3 did not come under any one of categories listed therein.

R-3 went on appeal before the Appellate Authority (R-2) who ruled that the award of the Labour Court was confirmed by this Court and the Supreme Court. Hence, the period from July 25, 1988 to March 6, 1996 should be taken as the basis for computing gratuity.

Mr Justice K. Chandru, who heard the petition challenging the order dated June 8, 2004 of R-2, held that the Division Bench of this Court had held that there was no break in service and that the employer-employee relationship had continued. It was not a case where the employer could take advantage of non-employment of the period and totally exclude the service for computation of gratuity. The writ petition lacked in merits, the judge ruled. The petition stood dismissed.

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