NEW DELHI, Jan 7: There is no violation of principle of equal pay for equal work if persons, retiring in normal course, are treated differently with those who opt for special voluntary retirement scheme (VRS), the Supreme Court has said.
The bench comprising Justices Anil R Dave and Shiva Kirti Singh said employees, opting for VRS, form a separate class in relation to those retiring in normal course.
It said the employees, who took VRS, are not entitled to enhanced pensionery benefits which are being given to others with retrospective effect.
“True, that those who retired under the Scheme did the same work which was being done by those who retired in normal course, but one cannot forget the fact that those who retired under the Scheme got substantially higher retirement benefits,” the bench said.
“The employees who retired under the Scheme form a separate class of employees who were given many benefits, which are not given to employees retiring in normal course. If they all form a separate class, by no stretch of imagination it can be said that all those who retired under the Scheme and those who retired in normal course, are similarly situated,” it said.
The bench passed the verdict on a bunch of petitions filed by employees of five nationalized general insurance companies who prematurely retired on certain conditions with some special benefits under a scheme called “General Insurance Employees Special Voluntary Retirement Scheme, 2004”.
After retirement of several employees under the scheme, the insurance companies, on December 21, 2005, came up with a notification giving benefit of revision of pay with retrospective effect from August 1, 2002, provided the employees were in service on or after August 1, 2002.
The retired employees under the scheme sought revision of their pension saying that they were in service on August 1, 2002 and they are entitled for higher pension.
The bench also held that if all the benefits are given to the persons who had already opted for retirement under the Scheme, the real purpose with which it had been framed would be frustrated.
“It is crystal clear that the employees had already opted under the Scheme – under a specially made Scheme, which was framed only with an intention to reduce future expenditure of the employers,” it said.
The bench said that in normal circumstances when an employee retires from service, his relationship with the employer comes to an end.
“The retired employee would not have any right of redetermination of his pension but only in cases where salary is revised with retrospective effect, the retired employee gets the benefit of additional pension and that too in certain cases,” it said.
“Normally, retrospective rise in salary is given to those who are in service at the relevant time or who had retired in normal circumstances. The employees who had opted under the Scheme had not retired as per the normal conditions of service but had retired under the Scheme upon taking some special additional benefits,” it added.
The Gujarat High Court had ruled in favour of companies taking a view that the employees who had retired under the Scheme were not entitled to any benefit of pay rise as they had already severed the relationship with the Employers and were no more in employment.
However, the Himachal Pradesh High Court had held that the employees who had retired under the Scheme were entitled to the benefit of pay revision. (PTI)
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