The Supreme Court has clarified that the statutory authority handling gratuity disputes can only calculate what is owed, not decide which employer must pay it, in a ruling that benefits ONGC.

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• The Supreme Court ruled that the Controlling Authority under the Payment of Gratuity Act has power only to compute the amount payable to an employee, not to adjudicate who is liable to pay it.
• The judgment came in M/S Oil and Natural Gas Corporation Ltd v Suryakand D. Lad & Ors (2026 INSC 1019), delivered on 9 September 2026.
• A bench of Justices Ahsanuddin Amanullah and Manmohan set aside a Bombay High Court order that had held ONGC liable to pay gratuity to workers engaged through a contractor.
• The Court held that a principal employer cannot be made liable for the gratuity of contractual workers where no direct employer-employee relationship exists between them.
• The Controlling Authority had initially held ONGC liable, but the Appellate Authority reversed that finding in ONGC's favour before the Bombay High Court restored the original order.
• The Supreme Court restored the Appellate Authority's order, ruling in ONGC's favour and setting aside the High Court's approach.
• ONGC had argued that under Section 21(4) of the Contract Labour (Regulation and Abolition) Act, 1970, its responsibility as principal employer extends only to wages, not gratuity, which is a distinct component under the Payment of Wages Act, 1936.
• ONGC also cited Clause 12.4.1 of its contract with the contractor, which stated the arrangement was a job contract creating no employer-employee relationship with the contractor's workers.
• The Court clarified that its ruling does not settle whether a principal employer can never be liable for contract workers' gratuity, leaving that broader question open.
• Since ONGC had already paid the gratuity claimed by the workers, the Supreme Court directed that no recovery be made from them.
• The ruling means contract workers must generally pursue gratuity claims against the contractor named in their appointment papers, not the principal employer, unless a genuine employment link is separately established.