Daily-Wage Employees Treated As Permanent Under 1988 Government Resolution Entitled To Annual Increment Benefits: Supreme Court

"The contention advanced before the Division Bench of the High Court that they were not entitled to grant of the increment only on the ground that they were daily wagers cannot be countenanced." Supreme Court, in a significant ruling dated October 06, 2026, held that daily-wage skilled workers who have been granted the status of permanent employees under the Government Resolution dated 17.10.1988 are entitled to the benefit of annual increments.

A bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva observed that once the State treats such employees as permanent for the purposes of payscale, allowances, and pension, it cannot arbitrarily deny them the benefit of an increment on the sole ground of their initial daily-wage status.

The appellants, who served in the Irrigation Department of the State of Gujarat for over 30 years, had retired on the 30th of June of various years. They sought the benefit of the increment which fell due on the 1st of July, relying on the judgment in Director (Administration and Human Resources), KPTCL vs. C.P. Mundinamani. While a single Judge of the High Court allowed their plea, a Division Bench subsequently quashed the order, contending that daily-wage workers were ineligible for such increments.

The primary question before the court was whether daily-wage skilled workers, who have attained the status of permanent employees pursuant to a government resolution, can be denied annual increments upon retirement. The court was also called upon to determine the applicability of the ratio in C.P. Mundinamani to such employees and to clarify the mechanism for granting arrears for retired personnel.

Resolution Confers Permanent Status

The court emphasized that the Government Resolution dated 17.10.1988 explicitly granted pay and facility benefits to daily-wage skilled workers who completed 10 years of service. These employees were entitled to be placed in the running payscale, receive allowances, and qualify for pensionable service.

"The contention advanced before the Division Bench of the High Court that they were not entitled to grant of the increment only on the ground that they were daily wagers cannot be countenanced."

Applicability of Precedents

The bench clarified that the legal position regarding the grant of an increment after one year of service is no longer res integra. The ratio laid down in C.P. Mundinamani is binding, and the State's attempt to distinguish the appellants' case based on their status as daily wagers was found to be without merit, given their long-standing classification as permanent employees.

Refinement of Incremental Benefits

The court noted that the application of C.P. Mundinamani is subject to the directions issued in subsequent miscellaneous applications on 20.02.2025. It specifically invoked the modified "clause (d)" of those directions, which dictates that for retired employees who have approached the court, enhanced pension including the increment is payable for the period of three years prior to the date of filing the petition.

"The appellants would be covered by the modified clause (d), which provided that enhanced pension, by including one increment, would be payable for the period of 3 years prior to the month in which the writ petition was filed."

Time-Bound Compliance

The Court underscored that while no interest was granted on the arrears in the aforementioned 2025 order, this imposes a strict duty on the authorities to adhere to time stipulations. The State is directed to examine the individual cases and release the payments within 30 days.

Failure to comply with the 30-day window will attract interest at the rate of 6% per annum for the period of delay. The court disposed of the appeal by setting aside the Division Bench order, thereby restoring the entitlement of the employees to their incremental benefits and consequential pension revision.

Date of Decision: 06 October 2026