Kerala gratuity order to cause irreparable loss: HDFC Bank

HDFC Bank’s appeal is against an order by Aneish Ravindra, assistant labour commissioner, Ernakulam, acting as the controlling authority under the Payment of Gratuity Act, 1972.

P.V. Unnikrishna Pillai, who worked at the bank for 16 years till 2022, had sought the authority’s intervention, seeking more gratuity on the grounds that the “personal pay" component in his salary should be included while calculating his gratuity and not just his “basic pay". In his order, Ravindra directed HDFC Bank to pay an additional ₹7.22 lakh plus 10% simple interest. This was over and above the gratuity of ₹5.95 lakh already paid by the bank. Mint reported on 6 March that the order might force the bank and other companies to shell out more in gratuity payments to employees.

“The findings of the controlling authority are clearly perverse, illogical, irrational, unreasonable, contrary to law and hence unsustainable both in law and on the facts," the bank said in its appeal before the deputy chief labour commissioner in Kochi.

Mint has seen a copy of the appeal.

According to the appeal, the controlling authority should have considered “the far-reaching effect/impact" of its decision and, without analyzing the same, has passed the order, which needs to be set aside on merit. The bank said the controlling authority ought to have found that the bank paid the eligible gratuity to the former employee immediately after he left his job. It added that the gratuity paid was accepted by Pillai without any protest or dispute.

“While passing the impugned order, the controlling authority failed to mention any reasoning to conclude that the term wages include personal pay for the calculation of gratuity under Payment of Gratuity Act, 1972," the appeal said.

The bank argued that as per Section 2(s) of the Act, wages mean all emoluments earned by an employee while on duty or on leave which are paid or are payable to him in cash and include dearness allowance. HDFC Bank said that under the Act, this does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.

“The above definition reveals that only basic pay and dearness allowance need to be considered for the purpose of gratuity and not on any other allowances," it said.

An email sent to a spokesperson for HDFC Bank seeking responses remained unanswered till press time.

Pillai, too, said he would also appeal the order, despite it being in his favour.