The schools claimed violation of their fundamental right to equality (Article 14), right to do business (Article 19(1)(g)), right to life (Article 21), and right to property (Article 300A).

There is good news for teachers teaching in private schools. The Supreme Court held that teachers working in private schools are employees and they are entitled to gratuity under the Payment of Gratuity Act as amended in 2009 by the Central Government. 

Let us tell you that the PAG Act is in force from 16th September 1972. Under this, there is a provision to give the benefit of gratuity to the employee who has worked continuously for at least 5 years before his retirement, resignation, or leaving the institution due to any reason. The Act was also extended to educational institutions having ten or more employees through a notification issued by the Ministry of Labor and Employment on April 3, 1997. In such a situation, these Acts also apply to private schools.

After losing cases in several high courts, private schools challenged the 2009 amendment in the country’s top court. According to him, teachers imparting education to students should not be treated as employees under section 2(e) of the Payment of Gratuity (Amendment) Act 2009. They relied on the January 2004 judgment of the apex court in the Ahmedabad Private Primary Teachers Association case, which laid down this principle.

Rejecting the contention of the schools, a bench of Justices Sanjiv Khanna and Bela M Trivedi said, “This amendment removes the injustice and discrimination faced by teachers due to a continuing legislative error. It was understood after the judgment was announced.” The Supreme Court upheld the legislative act to bring amendments and remove the blame as stated in the 2004 Supreme Court decision.

The schools claimed violation of their fundamental right to equality (Article 14), right to do business (Article 19(1)(g)), right to life (Article 21), and right to property (Article 300A). The schools said that they are not financially equipped to pay gratuity to the teachers. The bench told the schools that payment of gratuity is not a reward offered by private schools, it is one of their minimum conditions of service. The court said, “The contention of private schools is that they do not have the capacity to pay gratuity to teachers. His argument is unreasonable. All establishments are bound to comply with other laws including the PAG Act.”

The bench said that some states may have fee fixation laws which bar schools from increasing fees to meet the additional financial burden. Compliance with these laws does not mean that teachers should be denied gratuity. Whoever deserves it.

The bench directed the private schools to pay the gratuity to the employees/teachers along with interest as per the provisions of the PAG Act within a period of six weeks.

Let us tell you that private schools had approached many high courts in this matter. They did not get any relief from Delhi, Punjab and Haryana, Allahabad, Madhya Pradesh, Chhattisgarh, Bombay, and Gujarat High Courts. These decisions were challenged separately in the apex court by the schools. Here too, they are only disappointed.