Kerala High Court: Benefit Of Gratuity Act Cannot Be Denied To An Employee By Designating Him As A Trainee

Source:-https://www.theindianwire.com

The Kerala High Court has observed that an employer should not deprive an employee from the privilege of the Gratuity Act by nominating him/her as a trainee while extracting daily work from him. Under the Gratuity Act, Justice AM Badar noted that a trainee is not exempted from the meaning of the term ’employee,’ but only a ‘apprentice’ is excluded. Thus, while rejecting a writ petition filed by IREL (India) Limited/employer challenging an order issued by the Controlling Authority under the Payment of Gratuity Act, 1972, the court stated that the trainee is actually an apprentice and therefore not an employee as specified in Section 2(e) of the Gratuity Act.

The employer’s argument was that for the initial duration of two years when the employee was hired as a trainee, the employee was not entitled to grant the gratuity, which is equal to his appointment as an apprentice. They relied on a Karnataka High court decision where it was held that a trainee could not be entitled to gratuity in the absence of any legislative provision under the Gratuity Act which could be placed into service.

Justice Badar disagreed with this opinion and noted that under the Gratuity Act, a trainee is not exempted from the meaning of the term ’employee,’ but only a ‘apprentice’ is excluded. During the course of the so-called training, the court said that the trainees perform different duties and those who are not represented in a certain specified trade should not be called as an apprentice or learner.

When interpreting the beneficial provisions of the law, the nomenclature of the post is not of much significance. Undoubtedly, the Gratuity Act is a welfare statute that only forbids an apprentice from been paid gratuity during such a training period. However, it would definitely defeat the intent of the welfare law by designating an employee as a trainee, extracting routine work from him and then refusing him the value of the Gratuity Act under the pretext that such an employee is a trainee.

In Chairman-Cum-Managing Director, Orissa Mining Corporation Ltd v. Controlling Authority, Payment of Gratuity Act, the Orissa High Court had held that, under the Apprentices Act, a trainee working under an employment contract is not an apprentice, unless he is undergoing apprenticeship training in a specified trade under an apprenticeship contract.

The court declared that, for the period from 16.07.1991 to 15.07.1993, the employee was not entitled to gratuity because it showed that he did not receive any training during that period and, as such, was not an apprentice and was exempted from the beneficial legislation, i.e. Gratuity Act Payment, 1972.