Contractual Employees Entitled to Pension Benefits: Supreme Court

In a significant ruling, the Supreme Court of India has delivered a judgment affirming the entitlement of contractual employees to pension benefits. The bench, comprising Hon’ble Mr. Justice S. Ravindra Bhat and Hon’ble Mr. Justice Aravind Kumar, dismissed the State of Himachal Pradesh’s appeal against a High Court decision granting pensionary benefits to contractual employees.

The judgment hinged on the interpretation of Rule 2 and Rule 17 of the CCS Pension Rules, 1972. The Court held that the opening phrase of Rule 2, “Save as otherwise provided in these rules,” allows the application of other provisions. Rule 17, which deals with counting of service on contract, was deemed applicable to the regularization of contractual employees and counting of their past service for pension purposes.

The Court rejected the argument presented by the State, which relied on Rule 2(g) to exclude contractual employees from pension benefits. The judges emphasized that Rule 17 was specifically designed to address cases where employees initially engaged on a contract basis were later regularized, allowing for the inclusion of their past contractual service for pension computation.

Justice Bhat, in the judgment, remarked, “The interpretation of Rule 17 aligns with the principles of fairness and equity, ensuring that contractual employees are not disadvantaged upon regularization.”

The Court further highlighted that the voluntariness of entering into contractual services was no longer applicable post-regularization, as the terms changed upon regularization.

As a result of this ruling, contractual employees who had their services regularized will now be able to count their past contractual service towards pension benefits. The Court issued directions for the State to facilitate the exercise of pension options by the concerned employees and to process these options within a stipulated timeframe.

This judgment underscores the Court’s commitment to upholding the rights of contractual employees and ensuring equitable treatment in matters of pension entitlement.

Date of Decision: 07th August, 2023

STATE OF HIMACHAL PRADESH & ANR.  vs SHEELA DEVI           

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