The Punjab government has decided to enhance the gratuity and leave encashment payable to employees who retired between January 1, 2020, and June 30, 2021, by allowing higher notional Dearness Allowance (DA) to be taken into account while calculating the two retirement benefits. The development came before the Punjab and Haryana High Court during the hearing of two petitions filed by retired employees through counsel Sunny Singla and Kanwar Abay Singh.
Court Hearing and Government Notification
As the matter came up for resumed hearing before Justice Namit Kumar’s Bench, the State counsel produced a copy of a July 6 notification issued by the Finance Department (Finance Pension Policy and Coordination Branch). The notification, taken on record by Justice Kumar’s Bench, stated that gratuity and leave encashment under the existing instructions in respect of state government employees who retired on or after January 1, 2020, and up to June 30, 2021, were required to be calculated by taking dearness allowance at 17 per cent of the basic pay. However, the government – noting that gratuity and leave encashment were one-time retirement benefits – observed that employees retiring during the period had been allowed a lesser amount than what would otherwise have been calculated.
Revised DA Rates for Different Periods
The notification states: "Keeping in view that gratuity and cash payment in lieu of leave are one-time retirement benefits admissible to employees on retirement and employees who retired during the period from 1, 2020, to June 30, 2021, have been allowed lesser amount than what would have been calculated but for the aforesaid notification, the matter has been considered sympathetically with a view to allowing the same to such employees." Accordingly, the government conveyed that the amount of Dearness Allowance to be taken into account for calculating gratuity and leave encashment for its employees retiring during the period would be 21 per cent of basic pay for employees retiring between January 1, 2020, and June 30, 2020; 24 per cent of basic pay for employees retiring between July 1, 2020, and December 31, 2020; and 28 per cent of basic pay for employees retiring between January 1, 2021, and June 30, 2021.
Implementation and Compliance
The notification further provided that all other conditions under the Punjab Civil Services Rules and instructions issued from time to time would continue to apply while calculating gratuity and leave encashment. It added: "All the pension sanctioning authorities be directed to clear the benefits within a period of three months from the issuance of the instructions as per rules." Taking note of the developments, Justice Kumar adjourned the matter to July 14. The state was represented by Additional Advocate-General Anu Chatrath and Deputy Advocate-General NPS Hira.
Impact on Retirees
The notification revises the notional DA to be taken into account for calculating gratuity and leave encashment of Punjab government employees who retired between January 1, 2020, and June 30, 2021, and directs that the consequential benefits be cleared within three months. This is expected to result in higher gratuity and leave encashment amounts for eligible retirees, in accordance with the revised calculation prescribed by the government.
