Teacher denied gratuity for retiring at 62 instead of 60; Allahabad HC orders payment with 6% interest, here's why

Smt Khan worked as an assistant teacher in an educational institution in Faizabad starting August 16, 1992. She retired from service on March 31, 2019, but the school refused to give her gratuity. The school said she was too old-the retirement age is 60 but she was 62 when she retired.

On September 13, 2023, the Principal Secretary, Minority Welfare Department, Government of Uttar Pradesh, rejected Smt Khan’s gratuity payment solely on the ground that she did not retire at 60 and continued to work till the age of 62.

Smt. Khan went to court. She said that just because she worked past age 60 does not mean she should lose her gratuity. She had worked continuously for many years and retired from the institution on March 31, 2019.


On September 30, 2026, Smt Khan won the case in Allahabad High Court as the court ordered the educational institution to immediately pay her the gratuity dues along with 6% interest from 2019. (Case no: WRIT - A No. - 8255 of 2023, citation: 2026:AHC-LKO:70249)

Also read: Rs 10 lakh cut from gratuity: High court backs employer after employee’s actions cause loss

Why did Smt Khan win the gratuity case?

Advocate Mayank Parashar from Clasis Law, a law firm, explained to ET Wealth Online: The concept of social security has always remained an employee-centric aspect under Indian laws. Whether under the new Labour Codes or the erstwhile framework, the grounds for gratuity disqualification have remained limited, and continuation in service with permission beyond the age of retirement is not, by itself, one of them. The employee succeeded because the reason based on which gratuity was denied was not statutorily valid.

Although the decision arose in the context of a state-regulated madrasa employee, it also made a loud and clear statement for all establishments (even for the private sector) that gratuity entitlement should be assessed adequately. Before making any decision to hold back or deny gratuity (or any social security) employers should have a clear and legally sustainable basis.

Also read: No gratuity for teachers: SC

Allahabad High Court discussion

Government orders and rules cannot override Supreme Court and Allahabad High Court judgments

The Allahabad High Court observed that the state-regulated madrasa rejected her gratuity claim based on government orders and rules as per which Smt Khan failed to exercise the option of gratuity within the prescribed period.

However, the fact remains that Smt Khan was extended the benefit of working till the age of 62 and received all other admissible retiral dues.

However, The Allahabad High Court said that the mere reference to the applicable Government Orders and the alleged non-exercise of option cannot, by itself, conclude Smt Khan’s entitlement, particularly when the very issue concerning denial of gratuity on the basis of such option has subsequently received authoritative consideration by Allahabad High Court and the Hon’ble Supreme Court.


The Allahabad High Court said that once they has examined the legal effect of continuation in service for the extended period and has held that such circumstance cannot furnish a valid basis for denial of gratuity in the circumstances considered therein, the institution is required to examine Smt Khan’s claim in the light of the said legal position.


The Allahabad High Court also cited a Supreme Court case and said that gratuity is a benevolent scheme and upheld its payment to eligible employees.

Once employee is allowed to work till 62 years, the consequences of such extension must be honoured

The Allahabad High Court said that once Smt Khan was permitted to continue in service up to March 31, 2019 (62 years of age) and she did, then the institute while settling her retiral dues, cannot disregard the legal consequences flowing from the continued service.

The gratuity rejection order sent to Smt Khan does not demonstrate any independent consideration of her entitlement to gratuity apart from the alleged absence of an option to retire at the age of 60 years.

Thus Smt Khan won the case and could get gratuity with 6% interest.