Pension Under Employer's Superannuation Trust Is 'Wages'; Resignation Doesn't Defeat Earned Pension Rights: Calcutta High Court

The High Court at Calcutta has held that pension payable under an employer's superannuation trust can fall within the definition of “wages” under the Payment of Wages Act, and that employees who resign after completing the prescribed years of qualifying service cannot be denied pension merely because they did not retire on superannuation.

A Division Bench of Justices Lanusungkum Jamir and Rai Chattopadhyay dismissed four intra-court appeals filed by Heinen & Hopman Engineering (I) Pvt. Ltd., affirming a Single Judge's decision which had upheld the jurisdiction of the authority under the West Bengal Shops and Establishments Act to entertain employees' claims for pension through Form-N proceedings.

The dispute arose after several employees of the company resigned from service in September 2022 upon completion of substantial years of employment and accepted their terminal dues including gratuity. Months later, they approached the Joint Labour Commissioner seeking determination and payment of pension under the company's non-contributory superannuation trust scheme. The competent authority held that the pension payable under the scheme constituted “wages” and therefore fell within its jurisdiction under the Shops and Establishments Act. The employer's challenge to that order failed before the Single Judge, leading to the present appeals.

Before the Division Bench, the company argued that pension is not contemplated under the Shops and Establishments Act, that employer contributions to pension funds are expressly excluded from the definition of wages, and that resigned employees cannot be treated as “persons employed” so as to invoke the statutory forum. It was also contended that the claims amounted to mere money claims triable by civil courts. The employees, however, maintained that the pension scheme formed part of their service conditions and that any definite sum becoming payable upon fulfilment of the terms of employment qualifies as wages. They stressed that once they had completed the requisite years of service, pension became a vested right, irrespective of resignation.

Rejecting the employer's objections, the Court observed that the definition of “wages” under the Payment of Wages Act is intentionally wide and includes all remuneration or sums payable upon fulfilment of the employment contract, even if not expressly spelt out in the service agreement. The Bench held that there is a clear distinction between contribution to a pension fund and the actual disbursement of pension; while contribution may be excluded, the amount payable to an employee on meeting eligibility conditions can still constitute wages. Since the trust deed provided graded pension benefits purely on the basis of completed years of service and contained no forfeiture clause in case of resignation, the Court held that resignation by itself cannot defeat eligibility. The judges emphasised that once qualifying service is completed, the entitlement crystallises into an enforceable legal right.

Making broader observations on employer-funded welfare schemes, the Bench further noted that even a non-contributory pension fund, once created, cannot be treated as a matter of discretion or charity. It becomes a legally binding obligation, and the employer cannot administer it arbitrarily or retain benefits that have accrued to employees. In such circumstances, the statutory authority under the Shops and Establishments Act would be the proper forum to adjudicate disputes relating to pension treated as wages, and civil court jurisdiction would stand excluded.

Finding no illegality or perversity in the Single Judge's decision or the authority's order, the Court dismissed all four appeals and affirmed the maintainability of the employees' pension claims before the statutory authority.

Case Title: M/s Heinen & Hopman Engineering (I) Pvt. Ltd. v. State of West Bengal & Ors.

Case Numbers: MAT 682 of 2025; MAT 683 of 2025

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