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Revision No. FD‑214 of 1986 (Pb), decided on 12th July, 1986.
‑‑‑S. 7‑‑Payment of Wages Act (IV of 1936), S.2(vi)‑‑Gratuity, calculation of‑‑Wages, held, would include allowances while emoluments not forming part of wages would be excluded there from‑‑Gratuity could be calculated on permanent allowances which were paid along with basic pay.
‑‑‑S. 7‑‑Gratuity on cost of living allowance‑‑Entitlement to‑‑Employees, held, were entitled to gratuity on cost of living allowance right from date when provision of payment of cost of living allowance was made‑‑If at time when employee was recruited in service, cost of living allowance was being paid to workers, such employee would be entitled to gratuity calculated on said allowance according to rate prevailing at such date‑ However, if rate of cost of living allowance had been varying, gratuity would be calculated according to such variations.
‑‑‑S. 38(3)‑‑Employees Cost of Living (Relief) Act, 1973 (I of 1974), S.7‑‑Revisional jurisdiction, exercise of‑‑Modifying orders of Courts below relating to calculation of gratuity, Appellate Tribunal directed that gratuity be calculated on all permanent allowance right from date employee entered into service and on cost of living allowance from date wherefrom this kind of allowance was allowed and not from date when S.7 of Act I of 1974 was amended in 1977.
Nazir Ahmad Naz for Petitioner.
Mahboob Alam for Respondent.
Date of hearing: 22nd June, 1986.
The order, dated 21‑1‑1986 passed by the learned Presiding Officer, Punjab Labour Court No. 4, Faisalabad in its appellate jurisdiction under section 17 of the Payment of Wages Act is .reported to be wrong and of no legal effect.
2. The petitioner has been retired and the dispute between the parties is about the gratuity. The petitioner claims gratuity not only on basic pay but on allowances also as well as on cost of living allowance. The learned Authority allowed the whole claim but the learned lower appellate Court modified the order and allowed gratuity on basic pay and cost of living allowance. The learned counsel for the respondent has cited an unreported judgment of this Court, dated 18‑3‑1985 whereby, as it can be read, allowances were not allowed to form part of wages for the purpose of calculating the gratuity. The relevant sentence reads as under: --‑
"Other allowances do not form part of the wages for the purpose of calculating the gratuity."
It is clear from the quotation that the sentence is not correctly typed. It is clear that the judgment was wrongly typed and while correcting it, the words 'do not' were put wrongly. Prior to this decision, my view was that gratuity can be calculated on all those allowances which are of permanent nature. Subsequent to this judgment, dated 18‑3‑1985 too, view is the same that gratuity is to be calculated on allowances as well. In the definition of wages given in the Payment of Wages Act allowances are included and the emoluments which do not form part of wages have been expressly excluded. There appears to be no reason, why gratuity should not be calculated on permanent allowances which are paid along with the basic pay. Besides citing this Court's judgment referred to above, the learned counsel for the respondent has not led any forceful arguments in support of his plea that gratuity cannot be allowed on allowances.
3. The other point is that from which date cost of living allowance can be included for calculating gratuity. Section 7 of the Cost of Living (Relief) Act was amended in 1977. It has been argued by the learned representative of the petitioner that the employees who retired after the said date are entitled to get gratuity on cost of living allowance right from the date they entered into service. The other proposition is that the gratuity can be calculated on cost of living allowance from the date on which section 7 was amended. Since previous to the amendment made in 1977 law was that cost of living allowance shall not form part of wages for the calculation of gratuity, the said allowance can be included in the case of those who retired after the amendment. Since it has been provided that cost of living allowance would be covered by the definition of wages the employees are entitled to get gratuity on the cost of living allowance right from the date the provision of payment of cost of living allowance was made. If at the time the appellant was recruited in service cost of living allowance was being paid to the workers, he would be entitled to get gratuity calculated on the said allowance according to the rate prevailing at that time. If the rate of cost of living allowance had been varying, gratuity will be calculated according to the said rates. But the contention that gratuity can be allowed from the date section 7 was amended, is not sound and thus cannot be accepted.
4. As a result, the revision is partly accepted and modifying the, impugned orders of both the Courts below, it is directed that gratuity' be calculated on all permanent allowances right from the date the petitioner entered into service and on cost of living allowance from the date this kind of allowance was allowed and not from .the date when section 7 of Employees Cost of Living (Relief) Act was amended.
A. A.
Revision allowed.
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