047-SLLR-SLLR-2005-V-3-THE-FINANCE-CO.-LTD-vs.-KODDIPPILI.pdf
CA
The Finance Co. Ltd vs Koddippili (Srikandarajah, J.)
281
THE FINANCE CO. LTDvsKODDIPPILICOURT OF APPEAL.
EKANAYAKE, J.
SRI SKANDARAJAH, J.
CA 1111/2003.
OCTOBER 12, 2005.
NOVEMBER 19,2005.
MARCH 15,2005.
Payment of Gratuity Act, No. 12 of 1983, section 5(1) – Extension granted-Continued in employment after date of retirement on same terms and conditions- Gratuity accepted on date of retirement – Does the acceptance of gratuityaffect the continuity of employment – Computation of period of serving ?
The petitioner's retirement age was 21.05.1999. He was paid the full gratuityon 24.06.1999. However he was employed on contract from 22.05.1999 byletter dated 17.05.1999 for a period of one year and this was extended until
31.05.2002.
The 2nd respondent Commissioner of Labour held that the petitioner wasin employment till 31.05.2002 and he was therefore entitled to gratuity for theentire period till 31.05.2002.
The petitioner contends that on the 1st respondent retiring from servicesfrom the company, his services has come to an end and immediately thereafterthere was a new contract of employment although the 1st respondent continuedto work from the very date after he retired.
282
Sri Lanka Law Reports
(2005) 3 Sri L. R.
HELD:
The petitioner was given an extension before the retirement date andhe continued in service in the same capacity even after the said date ofretirement, the salary that was offered during the extension indicatesthat the 1st respondent's annual increments were taken intoconsideration-thus there is no break in service on the date of retirement.
In determining the continuity of service and to determine the obligationcast by law upon the employer under the payment of Gratuity Act theacceptance of the gratuity will not have a bearing.
APPLICATION for a Writ of Certiorari.
/. S. de Silva for petitioner.
G Dharmadasa for 1st respondent.
Ms. Eresha de Silva, SC for 2nd – 4th respondents.
Cur. adv. vult.
November 23, 2005.
SRISKANDARAJAH, J.The Petitioner in this application is seeking a writ of certiorari to quashan order of the" 3rd Respondent dated 3rd June 2003 (P6). By this orderthe petitioner was directed to pay a sum of Rs. 103,380.99 as gratuity andsurcharge to the 1 st Respondent who was an employee of the PetitionerCompany. This order was made on a complaint made by the 1 st Respondentto the Commissioner of labour that he was not paid gratuity for the entireperiod he served in the Petitioner's company but he was only paid gratuityup to 21.05.1999. The submission of the Petitioner is that the 1stRespondent reached his retirement age of 55 on 21.05.1999; according tothe letter of appointment his services has come to an end on that day. The
CA
The Finance Co. Ltd vs Koddippili (Srikandarajah, J.)
283
1 st Respondent was paid on 24.06.1999 the full gratuity payment whichwas an amount of Rs. 96,905/- less a sum of Rs. 30,178.84 on account ofan outstanding loan. The balance sum due as gratuity was accepted bythe 1 st Respondent (P5d) on account of all dues payable by the PetitionerCompany. Thereafter he was employed on contract from 22.05.1999 by aletter of 17.05.1999 for a period of one year (P5e) and this was extendeduntil 31.05.2002 (P5F to P5h). The position of the Petitioner is that the 1 stRespondent is only entitled for gratuity for the period he served as apermanent employee. At the time of retirement his services with thePetitioner has come to an end. The contract of employment entered intobetween the Petitioner and the 1 st Respondent after the 1 st Respondent'sretirement cannot be considered as continuous service. After inquiry the3rd Respondent rejected the submission of the Petitioner and made theimpugned order dated 03.06.2003. The Petitioner submitted that this orderdoes not give any reason and contains an error in computing the said sumdue to the 1 st Respondent.,
It is the submission of the Petitioner that on the 1 st Respondent retiringfrom the services of the company his services has come to an end andimmediately thereafter there has been a new contract of employmentalthough the said 1st Respondent continued to work in the Petitioner’sCom pany from the very date after he retired. The said period of contract iscompletely distinct from his original employment and the word uninterruptedservice in the definition of completed service only refers and contemplatesa case where the workman continued to work until he retired from theCompany but if during the aforesaid service due to no fault of the workmanhe could not work then it is deemed that he has been in uninterruptedservice. But once his services have been interrupted on retirement as inthis case his service has come to an end and his employment has beenlegally and legitimately interrupted. The Petitioner further submitted that itcannot be argued that merely because the 1 st Respondent continued tobe in service after retirement that he has been in uninterrupted service.
284
Sri Lanka Law Reports
(2005) 3 Sri L. R.
The 1st respondent claimed that he is entitled for the gratuity for theentire period of service and no deduction can be made in the gratuity onaccount of dues to the company. The 1 st Respondent in this case is notonly in the Petitioner's service after the retirement but he was holding thesame position as internal Auditor and he was awarded his annual incrementsafter the date of retirement when he was working under the said contract(P5e&P5f). The 1st Respondent was informed before he reached hisretirement date by a letter dated 17.05.1999. (P5e) that his services wouldbe extended for one year with effect from 22.05.1999. In view of thisextension, the services of the 1st'respondent did not come to an end on21.05.1999 as per the letter of appointment. The service of the 1stRespondent was extended from time to time and was terminated by letterdated 20.05.2002 (P5h) on 31.05.2002.
The payment of gratuity is governed by the Payment of Gratuity Act,No. 12 of 1983. Section 5 (1) of the said Act provides :
"Every employer who employs or has employed 15 or more workmenon any day during the period of 12 months immediately preceding thetermination of the services of workmen in any industry shall on termination(whether by the employer or workman, or on retirement or by the death ofthe workmen or by operation of law or otherwise) of service at any timeafter the coming into operation of this Act, of a workman, who has a periodof service of not less than 5 completed years under that employer, pay tothat workman in respect of such service, and where the termination is bydeath of that workman, to his heirs, a gratuity computed in accordancewith the provisions of this Part within a period of 30 days of such termination"
The Petitioner submitted that under section 5(1) of the Gratuity Act,gratuity has to be paid when an employee ceases to be in employment
CA
The Finance Co. Ltd vs Koddippili (Srikandarajah, J.)
285
and the same has to be paid within one month. The Petitioner has paid thegratuity to the 1 st Respondent within one month of the date of retirement/'. e. 24th June 1999 (P5d). By accepting the gratuity the 1 st Respondenthas accepted the termination of service and he cannot thereafter claimgratuity for the period he has served on contract. By the conduct of the 1 stRespondent he is estopped from claiming any gratuity for the period hehas served on contract.
The 1 st Respondent by his letter dated 4.6.1999 (3R3) requested thePetitioner not to pay him his gratuity up to 21.05.1999 in view of theextension of services. The petitioner nevertheless paid his gratuity up to21.05.1999. In any event in determining the continuity of service and todetermine the obligation cast by law upon the employer under the GratuityAct the acceptance of. the gratuity will not have a bearing. In view of thefact: that the Petitioner was given an extension before the retirement dateand he continued in service in the same capacity even after the said dateof retirement, the salary that was offered during the extension indicatesthat the 1 st respondent's annual increments were taken into consideration.This Court is of the view there is no break in service on the date of retirement.Therefore the 3rd Respondent has correctly decided that the 1 st Respondentserved the Petitioner's Company continually for a period of approximately9 years until his services was terminated on 31.05.2002 by letter dated20.05.2002 and therefore he is entitled for gratuity for the entire period ofservice. In these circumstances there is no reason for this court to interferein the order dated 3rd June 2003 (P6) and therefore the Court dismissesthis application without costs.
EKANAYAKE, J .-.I agree.
Application dismissed.