Jet Airways employees entitled to gratuity: Regional labour commissioner

The regional labour commissioner has passed an order in favour of at least three Jet Airways employees stating that they are entitled to their gratuity. It has also issued a notice to ‘Jet Airways’ through its representative resolution professional Ashish Chhawchharia to pay the gratuity dues within 30 days starting December 01.

The Labour Commissioner said the application was heard in Chhawcharia’s presence and said employee “is entitled to a payment of ₹5,22,930 as gratuity under the payment of Gratuity Act, 1972” according to a copy of the order reviewed by BusinessLine .

“Now, therefore, I hereby direct to pay the said sum of ₹5,22,930 within thirty (30) days of the receipt of this notice with an intimation thereof to me,” it added.

Insolvency court

Jet Airways had shut operation in April 2019. At its peak, the airline had 22,000 employees including 6,000 contract employees. Post this, the company was dragged to the insolvency court.

After four rounds of expression of interest (EoI), Jalan-Kalrock Capital submitted the resolution plan. In June this year, the Mumbai bench of NCLT approved the plan and agreed the transfer of the management to the consortium.

At around the same time, the employees approached the labour commissioner, pointing out that their gratuity was not considered. A group of employees even approached the NCLAT.

“The Association of Jet Employees in the staff and officers cadres is the officially recognised union and had represented the non-payment of gratuity to the central government Labour Ministry. In addition to this, a large number of staff in other categories in the management cadre had also submitted their claims in the prescribed form. During deliberations in the labour office, it was agreed to tag other cases with these three specific cases,” said a person close to the matter.

Other employees applications

Several other employees also submitted their applications to the labour commissioner. However, due to paucity of time, it was impossible to hear all the cases.

“As the three illustrative or test cases are tagged with other applications and accepted by the opposite party, we believe similar orders will be applicable. There are over 300 application submitted by individuals in all categories. We are confident that similar orders will be passed in all the applications which are clubbed,” the person said.

“The Employees of the company hope that their legitimate legal dues are paid by Goyal /Jalan as Goyal unequivocally termed himself as the Head of the Jet family. You cannot relaunch a powerful brand without motivated human capital contributing emotions at work especially in the service industry,” said Narayan Hariharan, former Senior VP, Jet, and Visiting Professor, TISS. Hariharan was instrumental in helping the employees.

But does this really mean the employees will get their gratuity?

Experts view

Rahul Kamerkar, Senior Counsel, who appeared on behalf of Jet Airways employees in NCLT, said, “S. 36(4)(a)(iii) of the IBC specifically states that the workmens’ gratuity fund will not form a part of the assets of a corporate debtor for the purposes of resolution or winding up. in the old days, the judges of the Supreme Court had held that even though gratuity dues were pari passu with secured creditors as per the Companies Act, they will have to be paid out first in priority, superseding any claims of secured creditors,”

However, after reading the order, Nitin Kulkarni, another lawyer who specializes in labour laws, said, “I have gone through the order but it is not possible to recover the amount from Jet Airways as there is already an order from NCLT and Jet Airways no longer exists.”

A Senior Counsel who was appearing on behalf of Jet Airways during the IBC process too said that the possibility of the employees getting the money is close to nil.

“They can appeal in the NCLAT. Jet Airways was handed over to a new management who gets it as a clean slate. Hence, quite possibly, the new management is not responsible for said dues,” he said.

Besides, he added, Jet Airways did not have enough assets to pay off the gratuity and salaries along with other dues. “Even if Jet was to be liquidated now, there is little possibility that the employees will get their dues.”

According to sources, the gratuity amount was close to ₹218 crore. However, BusinessLine was not able to independently verify this amount.

When contacted for comment, the company said, “The matter is subjudice and we don’t have any comments.”

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