The Supreme Court on Monday ruled that teachers of private schools are employees under the payment of gratuity Act.
The bench of Justices Sanjiv Khanna and Bela M. Trivedi stated that “The amendment seeks to bring equality and give fair treatment to teachers. It can hardly be categorised as an arbitrary and high-handed exercise.”
In this case, By Notification issued by the Ministry of Labour and Employment, Government of India on 3rd April 1997, the provisions of the PAG Act have been made applicable to educational institutions with ten or more employees.
The private schools being educational institutions, in which ten or more persons are employed, became liable to pay gratuity to their employees as per the provisions of the PAG Act.
However, some private schools raised a dispute claiming that the teachers in educational institutions or schools are not “employees” as defined in Section 2(e) of the PAG Act.
The teachers were denied the benefit of gratuity, but other employees of the private schools were entitled to the benefit of gratuity.
The issue for consideration before the bench was:
Whether the teachers are entitled to payment along with the interest in accordance with the provisions of the PAG Act?
After relying upon a few judgments the bench observed that “the educational institutions are entitled to reasonable surplus to meet the cost of expansion and augmentation of the facilities and this does not amount to profiteering. It is possible that in some States there...
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