The Calcutta High Court held that pension payable under an employer’s superannuation trust falls within the definition of “wages” under the Payment of Wages Act and that employees who have resigned after completing the prescribed qualifying service cannot be denied the pension benefits they have earned merely because they did not retire on superannuation. A Division Bench of the High Court dismissed four intra-court appeals filed by a private engineering company challenging a Single Judge’s decision which upheld the jurisdiction of the authority under the West Bengal Shops and Establishments Act to entertain claims for pension through statutory proceedings. The dispute originated when several employees of the company resigned in September 2022 after completing substantial years of employment, accepted their terminal dues including gratuity, and months later sought determination and payment of pension under the company’s non-contributory superannuation trust scheme. The Joint Labour Commissioner had held that the pension payable under the trust constituted “wages” within the meaning of the Act and therefore fell within the jurisdiction of the statutory authority to adjudicate claims. The employer challenged this order, arguing before both the Single Judge and the Division Bench that pension is not contemplated under the Shops and Establishments Act, that employer contributions to pension funds are expressly excluded from the definition of wages, and that employees who had resigned could not be treated as “persons employed” so as to invoke the statutory forum. The company also contended that the claims were merely money claims triable exclusively by civil courts and not by the statutory authority.
The employees maintained, and the High Court agreed, that the pension scheme formed part of their service conditions and that any definite sum becoming payable upon the fulfillment of those conditions qualifies as wages. They emphasised that once they had completed the requisite years of service, pension became a vested right, irrespective of the manner of exit, and not subject to forfeiture simply because they had resigned rather than retired. The bench observed that the definition of “wages” under the Payment of Wages Act is wide and inclusive, encompassing all remuneration or sums payable upon fulfillment of the employment contract, even if such payments are not expressly detailed in the service agreement. The court distinguished between contributions to a pension fund and the actual payment of pension, noting that while contributions may be excluded from the definition of wages, the amount payable to an employee upon meeting eligible conditions can still constitute wages.
In this case, the trust deed provided graded pension benefits purely on the basis of completed years of service and did not contain any clause for forfeiture in case of resignation. Therefore, the court held that resignation by itself cannot defeat the employees’ eligibility for pension benefits once the qualifying service was completed. The entitlement to pension, the court held, crystallized into an enforceable legal right upon meeting the eligibility criteria. The bench further made broader observations on employer-funded welfare schemes, stating that once a non-contributory pension fund is created it cannot be treated as an act of discretion or charity on the part of the employer. Such schemes, the court noted, become legally binding obligations, and the employer cannot arbitrarily administer or withhold benefits that have accrued to employees. In these circumstances, the statutory authority under the Shops and Establishments Act was the proper forum to adjudicate disputes relating to pension treated as wages, thereby excluding jurisdiction of civil courts over such claims.
The employer’s objections that resignation should disqualify employees from claiming pensionable benefits were rejected on the basis that the trust deed did not contain any forfeiture provisions, and that the pension entitlement was a vested right once the qualifying period of service was completed. The court emphasised that the pension payable under the superannuation trust was not a discretionary benefit but a contractual entitlement forming part of the remuneration due to employees upon fulfillment of service conditions. The High Court found no illegality or perversity in the Single Judge’s decision or the authority’s order and, accordingly, dismissed all four appeals. It affirmed the maintainability of the employees’ pension claims before the statutory authority, holding that the claims for pension could be entertained and adjudicated as disputes involving wages under the relevant Act.
In dismissing the appeals, the court reinforced the principle that pension rights earned under an employer’s superannuation scheme, where the trust deed sets out qualifying service conditions and lacks forfeiture clauses, cannot be defeated merely by reason of an employee’s resignation after completing the qualifying service. The entitlement to pension in such contexts was held to be part of the wages payable to the employee in law, and the statutory authority tasked with adjudicating claims under the Shops and Establishments Act had jurisdiction to determine these disputes. The decision upholds employees’ rights to pension benefits earned under employer-created trust schemes and clarifies that resignation does not automatically extinguish vested pension entitlements where qualifying service conditions have been satisfied and no forfeiture provision exists in the governing instruments of the pension scheme.
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