The Punjab and Haryana High Court has upheld an accident compensation award of Rs 38.7 lakh to a waiter who suffered 100% permanent disability, ruling that regularly earned tips must be included in his income while calculating compensation.
Justice Mandeep Pannu dismissed an appeal filed by United India Insurance Company Limited against the March 24, 2017, award of the Motor Accident Claims Tribunal, Chandigarh. The tribunal had assessed the claimant’s monthly income at Rs 12,000 and directed the insurance company to pay the compensation.
The insurance company argued that the claimant’s monthly income should have been calculated at Rs 8,000, based on his salary certificate. It contended that the additional Rs 4,000 received as tips was voluntary, uncertain and not a fixed component of his employment income.
The claimant had worked as a waiter at Score Club, drawing a monthly salary of Rs 8,000 and receiving approximately Rs 4,000 more in tips from customers. Through his counsel, he submitted that the regular receipt of tips had been established by evidence and had not been disputed by the insurer.
The High Court held that tips earned by hospitality-sector employees cannot be excluded from income assessment merely because they are not paid directly by the employer or listed as a fixed salary component. The court specified that such income must be shown through evidence and established as regularly earned.
In reaching its decision, the High Court referred to an earlier Delhi High Court judgment that supported the inclusion of tips while determining the income of hospitality workers for compensation claims under the Motor Vehicles Act. It also cited a Bombay High Court judgment, which rejected the argument that tips were too uncertain to be considered because they depended on customer visits and payments.
The court also noted the extent of the claimant’s disability. It said that the degree of disability has a direct bearing on compensation, particularly when calculating the loss of future earning capacity. In cases involving 100% disability, the consequences for a person’s future life and ability to earn assume particular significance, the Bench observed.
The ruling places the evidentiary question at the centre of compensation claims involving workers whose earnings include variable components. For hospitality employees, the judgment indicates that regular tips may form part of assessable income when supported by testimony and other evidence, even if they do not appear in a formal salary certificate.
The High Court’s decision leaves the Motor Accident Claims Tribunal award of Rs 38.7 lakh and the insurance company’s liability to pay the compensation undisturbed.
