SC ruling on VRS employees and pay revision

A bench of Justices Aniruddha Bose and S. Ravindra Bhat rules on the eligibility of VRS employees for pay revision benefits.


The Supreme Court of India has recently issued a ruling that employees who took advantage of a Voluntary Retirement Scheme (VRS) cannot claim the same benefits as those who retired at the age of superannuation.

This decision was made by a division bench of the Supreme Court while partially allowing an appeal filed by the Maharashtra State Financial Corporation Ex-Employees Association. The Association had challenged the decision of the Industry, Energy and Labour Department, Government of Maharashtra which denied the benefit of revision of pay scales to employees of the Maharashtra State Financial Corporation (MSFC) who had retired or died between January 1, 2006 and March 29, 2010.

The decision of the State was to make the revision of pay scales as a result of the Fifth Pay Commission Report applicable to 115 employees of MSFC who were working as of March 29, 2010. The revision was given effect from January 1, 2006. The employees who retired during this period were denied the benefit of pay scales which was considered discriminatory and arbitrary because they were in continuous service and had even received the benefit of interim revision.

However, the Supreme Court noted that there was no distinction between those who retired or died before March 29, 2010 and those who continued in service and were given the pay revision.

The exclusion of the retired employees was also found to be violative of Article 14 of the Constitution of India. On the other hand, employees who took advantage of the VRS and voluntarily left the service of MSFC during this period were held to be in a different category and could not claim parity with those who continued to work and superannuated.

The Court stated that VRS employees chose to leave the corporation and that the additional amount they received as an ex-gratia amount was equal to a month’s salary for each completed year of service.

The Court also held that employees who ceased to be in employment due to termination or dismissal would not be entitled to the benefit of pay revision. In conclusion, the Supreme Court has made it clear that VRS employees cannot claim parity with others who retired at the age of superannuation and that those who were terminated or dismissed would not be entitled to the revision of pay scales.

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