The Central Administrative Tribunal, Allahabad bench of Justice Om Prakash recently made a decision regarding the entitlement of employees to a notional increment earned on the last day of their service. The bench held that employees who retire on the last day of June are entitled to one notional increment due, even if they retire the next day after earning it.
Background and Arguments
The matter was brought before the Central Administrative Tribunal, Allahabad by applicants who retired from Railways on the last day of June in their respective years. They claimed that they were deprived of the notional increment due on the very next day, July 1st. The applicants argued that this issue had been settled by numerous judgments affirming their entitlement to the notional increment.
In response, the Management contended that since the applicants retired on the final day of June, they were no longer in government service on July 1st, and therefore ineligible for the notional increment.
Tribunal’s Observations and Decision
The Tribunal referred to a decision by the Supreme Court in a similar case, where the Supreme Court upheld the view taken by various high courts regarding the entitlement of employees to one annual increment earned on the last day of their service. The Supreme Court stated that a government servant is granted the annual increment based on their good conduct while rendering one year of service. Increments are given annually to officers with good conduct, unless withheld as a measure of punishment or linked with efficiency. Therefore, the increment is earned for rendering service with good conduct in a specified period. The Supreme Court held that a government servant who has rendered service for a specified period with good conduct is entitled to the annual increment, even if they retire the next day.
After examining the records, the Tribunal noted that the applicants retired in June of their respective years and that the original application was filed in 2024, indicating a significant delay since the cause of action arose. Due to this delay, the Tribunal held that arrear payment would only be granted for three years preceding the date of filing the original application. The Tribunal directed the Management to issue one notional increment to the applicants and revise the Pension Payment Orders (PPOs) accordingly. However, arrear payment for only three years preceding the filing of the original application was ordered, with an interest rate of 6% per annum.
Understanding Notional Increment
A notional increment refers to an imaginary or hypothetical increase in salary or benefits that an employee would have received if certain conditions were met. In the context of government service or employment, it typically refers to the grant of an increment or raise in salary that an employee would have been entitled to if they had continued in service for a specific period. An annual increment in salary or benefits often becomes due on a specific date each year, typically the anniversary of an employee’s joining date or the start of a fiscal or calendar year.