The Supreme Court observed that a teacher, irrespective of the type of educational institute he/she is working, is not an 'employee' under Section 2(e) of the Payment of Gratuity Act and and therefore has no right to invoke the Act for claiming gratuity under the Act from his/her employer.
In this case (Birla Institute of Technology vs. State of Jharkhand), the Jharkhand High Court had allowed plea of a retired Assistant Professor, who worked Birla Institute of Technology, and held that he is entitled to claim gratuity amount from the Employer under the Payment of Gratuity Act, 1972
Though, it was settled in Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer that a "Teacher" could not be regarded as an "employee" under Section 2(e) of the Act, the high court had distinguished it on the ground that it is applicable only to the primary teachers working in primary schools and since the case at hand is not a case of a primary teacher, it has no application to this case.
In the appeal preferred by management, the bench comprising of Justice Abhay Manohar Sapre and Justice Indu Malhotra observed that the high court made a incorrect reading of the said judgment.
The Court took note of the following observations made by the Apex court in Ahmadabad Pvt. Primary Teachers Association case: "Even if all the words are read disjunctively or in any other manner, trained or untrained teachers do not plainly answer any of the descriptions of the nature of various employments given in the definition clause. Trained or untrained teachers are not "skilled", "semi-skilled", "unskilled", "manual", "supervisory", "technical" or "clerical" employees. They are also not employed 9 in "managerial" or "administrative" capacity. Occasionally, even if they do some administrative work as part of their duty with teaching, since their main job is imparting education, they cannot be held employed in "managerial" or "administrative" capacity. The teachers are clearly not intended to be covered by the definition of "employee".
It said: "In our view, the High Court failed to read last line of Para 24 quoted above wherein this Court has held in clear terms that "teachers" are clearly not intended to be covered by the definition of "employee". The High Court was, therefore, not justified in making a distinction between the "teachers working in the primary schools" and the "teachers working in other educational institutions" .. In other words, the High Court failed to see that this Court had examined the expression "teacher" qua the expression "employee" defined in Section 2(e) of the Act and then held that "teacher" is not an employee within the meaning of Section 2(e) of the Act. While laying down the law, this Court did not make any distinction between the teachers inter se and nor made any distinction as to in which type of educational institute the teacher is working for determining his entitlement to claim the gratuity under the Act."
Allowing the appeal filed by the management, the bench clarified: "In case there is any other State Act or Scheme in force, which extends any benefit to the employees of the Institute only then respondent No.4 (Asst. Professor) would be liberty to take benefit of such Act/Scheme in accordance with law."