An Employee Who Resigns or Voluntarily Retires is Entitled to Gratuity, Provided he/she has Completed at Least 5 Years of Continuous Service: SC
On December 09, 2025 (Tuesday), the two-judge bench of the Supreme Court (SC), consisting of Justice Rajesh Bindal and Justice Manmohan, was hearing a matter of the appellant (deceased), who worked as a conductor for about 30 years, who was denied gratuity and other retirement benefits after resigning from the service due to family reasons. The SC bench held that an employee who resigns or voluntarily retires is entitled to gratuity, provided he/she has completed at least 5 years of continuous service, under the Payment of Gratuity Act, 1972. Section 4 of the Payment of Gratuity Act, 1972, states, “Payment of gratuity – (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years.-
(a) On his superannuation, or
(b) On his retirement or resignation, or
(c) On his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.”
During the proceedings, the learned counsel, appearing for the appellant, submitted, “The letter submitted by the deceased employee to resign from the job may not have been happily worded as he was not conversant with the legal language. The same should not be taken to the extent that he should be denied all his retiral benefits. The pension is not a bounty. It is earned by an employee after putting in long service. He had put in about 30 years of service and had resigned on account of family circumstances. Even if he had not completed 30 years of service, his period of service was more than 20 years and as per Rule 48 of Pension Rules he was entitled to receive pension. It will be too harsh to forfeit his entire service benefits merely because of a minor error in the resignation letter submitted by him.”
After hearing the matter, the SC said, “an employee who had rendered not less than five years of service will be entitled to payment of gratuity, regardless of the fact that he had retired or resigned from service.” Further, the bench directed the Delhi Transport Corporation (DTC) to pay gratuity to the appellant’s family, noting that the DTC (respondent) was not exempted from the application of the Payment of Gratuity Act.
