Law firm employees not entitled to gratuity payments

In a landmark case involving the right of an employee to a gratuity, Delhi High Court concluded that the office of an advocate is not an “establishment” under section 1(3)(b) of the Payment of Gratuity Act, 1972. This recent judgment reached on 17 March in Lalit Bhasin v The Appellate Authority under Payment of Gratuity Act, 1972 & Anr will come as a huge relief to all lawyers and law firms.

The case involved an employee in the office of the petitioner, who worked as a clerk for 23 years before resigning on 2 March 2002. The clerk claimed to be entitled to a gratuity and made an application under section 4 of the act to the controlling authority, which directed Bhasin to pay the employee gratuity. This order was upheld by the controlling authority and the appellate authority but subsequently challenged by Bhasin before Delhi High Court. The court, while overruling the order, held that the office of an advocate is not covered by the provisions of the Gratuity Act.

The court, while relying upon judgments of the Supreme Court, held that the service provided by a solicitor, functioning either individually or working together with partners, is a service which is essentially individual. Any subsidiary work which is purely incidental and which is intended to assist the solicitor in doing his job has no direct relation to the professional service ultimately rendered by the solicitor.

The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.