ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION

Office of the Managing Director,

Bus Bhavan, Hyderabad-624.

No. P1/756(2)/2009-PO.IV

CIRCULAR No. PD-28/2009, DATED  29.09.2009

Sub:     SETTLEMENTS - Settlement of Accounts of Employees - Payment of Gratuity  under Payment of Gratuity Act, 1972 - Further Instructions- Issued.

Ref:      Cir.No.PD-114/1994, dated 20.10.1994.

***

            Instructions were issued through Circular cited on settlement of Accounts of Employees.  It was stipulated vide para-3 on Gratuity that while calculating the gratuity of an employee, the following periods should be deducted from the length of service for payment of gratuity:

i)        The period for which the employee was under long absenteeism ie., absenteeism of one month and above.

ii)       The period of suspension which is treated as NOT ON DUTY for all purposes or for the specific purpose of gratuity.

iii)    The period during which the employee was on lien at his own interest and working in the Government or other Organisation, inside the country or outside the country.

iv)      The period during which the employee was not in continuous service.  The employee shall be said to be in continuous service for a period if he has during the period of twelve calendar months preceding the date with reference to which calculation is to be made has actually worked under the employee for not less than two hundred and forty days.

As per para-3 (i) of the Circular instructions on Gratuity, the periods during which the employee was under long absenteeism i.e, absenteeism for one month and above are to be deducted from the total length of service for payment of gratuity.

Similarly, as per para-3 (iv) of the said Circular, the employee shall be said to be in continuous service for a period if he has during the period of twelve calendar months preceding the date with reference to which calculation is to be made has actually worked under the employer for not less than two hundred and forty days.  Thus, if an employee does not actually work for a period of two hundred and forty days in any particular year, the same is being deducted from his total service for payment of gratuity.

            Sec.2(A) of The Payment of Gratuity Act deals with the matter of “Continuous Service”.  The provisions of the Act are as follows:

Sec.2-A(1):  “An employee shall be said to be in continuous service for a period if he has, for that period, been in un-interrupted service, including the service which may be interrupted on  account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after commencement of this Act”;

Sec.2-A(2): “where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of Clause(1) for any period of one year or six months, he shall be deemed to be in continuous service under the employer for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than two hundred and forty days”.

The Division Bench of A.P High Court in W.P Nos.16967 and 19964/89 held that, merely penalizing the employees for few days of absenteeism does not take away the case of the employees from the expression continuous service.  Therefore, the employees should be treated as in continuous service within the meaning of Sec.2 A(1) and the question of counting 240 days of actual working in that particular year as per Sec.2-A(2) does not arise.

        Thus, the instructions issued vide para-3(i) & (iv) of the said Circular are against the provisions of section 2-A of The Payment of Gratuity Act and therefore Units are seeking clarifications on the above two aspects of the Circular and clarifications are being issued in individual cases advising the units to follow the provisions under section 2-A and 2 (c) of Gratuity Act.

Further, the Hon’ble High Court held in several cases that an employee should be deemed to have been in continuous service during the removal period when continuity of service is granted by the Labour Courts/Industrial Tribunals and ordered to reckon the services relating to removal period whenever the continuity of service is granted in favour of the employees by the Courts.

            The issue has been examined in detail with reference to the provisions of The Payment of Gratuity Act, 1972 and the Judgments of the Hon’ble High Court of Andhra Pradesh. In order to maintain uniform procedure to compute the qualifying service for calculating gratuity, the following guidelines are issued, in partial modification of the instructions issued through circular cited, for strict implementation by all the Unit Officers.

1.                The provisions of Sec.2-A of “The Payment of Gratuity Act 1972” while computing the total service rendered by an employee for payment of gratuity; ignoring the instructions issued vide para-3(i) and (iv) on Gratuity through Circular No. PD-114/94, dated 20.10.1994; and

2.                  To reckon the services relating to removal period whenever the continuity of service is granted in favour of the employees by the Courts.

            The pending cases, if any, on above shall be disposed off accordingly.

            This has the approval of the VC&MD with the concurrence of Financial Advisor and Chief Accounts Officer.

B.S.R. MURTHY          

EXECUTIVE DIRECTOR (A&P)

To

All Officers of the Corporation

Copy to: RSAO, AG.RTC Branch, Mushirabad, Hyderabad.

Copy to: Secy. to Chairman/ PS to VC & MD.

Copy to: Dy.CAO(TA&INS) ( 10 Copies)

Copy to: PRO/HO for translation into Telugu.

Copy to: PO(Trg.):HO, for inclusion in monthly index of Circulars  (4 copies).

Copy to: General Secretary, APSRTC National Mazdoor Union, Hyderabad.

Copy to: General Secretary, APSRTC Employees' Union, Hyderabad.

Copy to: General Secretary, APSRTC Staff & Workers Federation, Hyderabad.

Copy to: General Secretary, APSRTC Security Staff Welfare Association, Hyderabad.         

Copy to: Notice Board & In charge, Record Room.