What is the Difference between 'Voluntary Resignation' and 'Voluntary Retirement'?

 

INTRODUCTION

 

Today, I will talk about the case of Union of India & Another v. Abhiram Verma, Civil Appeal No. 1027 of 2020, wherein the Hon’ble Supreme Court discussed the difference between ‘voluntary resignation’ and ‘voluntary retirement’.

 

DICTIONARY MEANING

 

Before adverting any further, let us peruse the dictionary meaning of these terms. Black’s Law Dictionary, Eighth Edition, defines ‘resignation’ as “the act or an instance of surrendering or relinquishing an office, right or claim” and “a formal notification of relinquishing an office or position.” Whereas ‘retirement’ has been defined as “voluntary termination of one’s own employment or career, especially upon reaching a certain age.”

 

IMPORTANT TAKEAWAYS

 

When I started reading this case, I was amazed that there could be so many differences between similar sounding terms such as resignation and retirement. And after reading this case-law, I find myself to be intellectually enriched. Following are the important takeaways from the judgment that I will discuss now: -

 

a. Resignation can be tendered at any time but premature/voluntary retirement stems from statutory provisions and it is confined to that.

 

b. In case of resigning, no prior permission or notice is mandated, but in case of voluntary retirement, permission of the employer is imperative.

 

c. Pension is not a matter of charity. It is a creature of the statute and what has been excluded in it cannot be included by implication.

 

d. Pension Rules do not apply retrospectively unless so expressly provided for.

 

e. Resignation has the effect of termination whereas voluntary retirement has different effects depending upon the concerned Rules governing the subject-matter.

 

f. Pension has many purposes and objectives. Such purposes and objectives must be taken into account while looking into the question that whether the termination of service is in actuality a resignation or does it fall within the four corners of retirement as defined in the concerned laws.

 

g. If in fact an employee has resigned, then later on, he cannot contend that what he meant was voluntary retirement. One cannot be allowed to breathe hot and cold at the same time.

 

OBSERVATIONS BY THE COURT

 

Now, in order to understand the difference between ‘voluntary resignation’ and ‘voluntary retirement’ in a better manner, let us sift through the pertinent observations by the Supreme Court.

 

Firstly, the Court noted that “there is a distinction between “resignation” and “voluntary retirement”. A person can resign at any time during his service, however, an officer cannot ask for premature/voluntary retirement unless he fulfils the eligibility criteria.”

 

Secondly, the Court cited the case of Senior Divisional Manager, LIC v. Shree Lal Meena, (2019) 4 SCC 479, wherein it was explained that: -

 

“In service jurisprudence, the expressions “superannuation”, “voluntary retirement”, “compulsory retirement” and “resignation” convey different connotations. Voluntary retirement and resignation involve voluntary acts on the part of the employee to leave service. Though both involve voluntary acts, they operate differently. One of the basic distinctions is that in case of resignation it can be tendered at any time, but in the case of voluntary retirement, it can only be sought for after rendering prescribed period of qualifying service. Other fundamental distinction is that in case of the former, normally retiral benefits are denied but in case of the latter, the same is not denied. In case of the former, permission or notice is not mandated, while in case of the latter, permission of the employer concerned is a requisite condition. Though resignation is a bilateral concept, and becomes effective on acceptance by the competent authority, yet the general rule can be displaced by express provisions to the contrary….”

 

Thirdly, the Court also clarified that “resignation has the effect of termination of an employee. Voluntary retirement though has the effect of termination of an employee, yet it has different consequences. In the former case, the ex-employee could not be entitled to pension, whereas in case of voluntary retirement, the latter one, the employee would be entitled to pension depending upon the terms postulated in the regulations or rules or the scheme.”

 

Fourthly, the Court also cited the case of Sheelkumar Jain v. New India Assurance Co. Ltd., (2011) 12 SCC 197, wherein it was laid down that “the court will have to construe the statutory provisions in each case to find out whether the termination of service of an employee was a termination by way of resignation or a termination by way of voluntary retirement and while construing the statutory provisions, the court will have to keep in mind the purposes of the statutory provisions.”

 

Fifthly, the Court also opined that a man ought not to have been deprived of pensionary benefits “merely because he styled his termination of service as “resignation” or because there was no provision to retire voluntarily at that time. The commendable objective of the Pension Rules is to extend benefits to a class of people to tide over the crisis and vicissitudes of old age, and if there are some inconsistencies between the statutory provisions and the avowed objective of the statute so as to discriminate between the beneficiaries within the class, the end of justice obligates us to palliate the differences between the two and reconcile them as far as possible.”

 

Sixthly, according to the Court, though Pension Schemes are delegated beneficial legislations, yet their beneficial construction or interpretation “cannot run contrary to the express terms of the provisions.” Such “issue cannot be dealt with on a charity principle. When the legislature, in its wisdom, brings forth certain beneficial provisions in the form of Pension Regulations from a particular date and on particular terms and conditions, aspects which are excluded cannot be included in it by implication.”

 

Seventhly, the Court also observed that in cases where an employee had resigned at a point of time when the concerned Pension Rules did not exist and later on, when such Pension Rules got framed, the said employee cannot claim Pension as a matter of right unless the concerned Pension Rules expressly provide for its retrospective applicability.

 

And lastly, the Court also said that once ‘resignation’ has been tendered by an employee, he must suffer the consequences and later on, he cannot be permitted to take ‘U’ turn by contending that what he really wanted was ‘premature retirement’ and not ‘resignation’.

 

ENDING REMARKS

 

Those were the observations by the Court. I hope that the difference between ‘voluntary resignation’ and ‘voluntary retirement’ is clear by now.