SC Rejects Plea Of Employer To Add ‘Break In Service’ As One Of Punishment [Read Judgment]

‘It would enable the employer to take action against its employees even in a situation where an employee is found absent even for a day and such absence will be treated as “break in service” under the Certified Standing Orders and also under the Payment of Gratuity Act.’

The Supreme Court dismissed plea of an employer who wanted to add ‘break in service’ as a ground for punishment.

In this case, the Joint Commissioner of Labour allowed Sri Ramnarayan Mills Ltd to amend their certified standing orders by adding “break in service” as one new ground in Clause 16 of the Chapter of Punishment in Certified Standing Orders. The Labour Court, on workers’ union plea, set aside this order of the Joint Commissioner. This order was challenged by the employer before the high court.

The division bench of the high court observed, dismissed the challenge, observing that that by including the break in service as one of the punishment, in fact, what the employer intends to do is only to get an opportunity to impose punishment which will have an impact in the gratuity of the employee of the concerned year. The employer assailed these orders before the apex court.

Upholding the high court judgment, the bench comprising Justice Abhay Manohar Sapre and Justice Indu Malhotra gave the following reasons for rejecting the employers’ plea

• The proposed ground, if allowed, would likely to be misused by the employer against its employees for their own benefit and detrimental to the employees’ interest.


• It would enable the employer to take action against its employees even in a situation where an employee is found absent even for a day and such absence will be treated as “break in service” under the Certified Standing Orders and also under the Payment of Gratuity Act. It will, therefore, be in conflict with the definition of the expression “continuous service” defined under the Payment of Gratuity Act which gives different modes of calculation for determining the continuous service for payment of gratuity amount.


• Such ground will defeat the very object of the Payment of Gratuity Act which is a beneficial legislation enacted for the benefit of the employees.


• It is neither bona fide nor reasonable and nor required and hence it cannot be allowed.