I am working at an effluent treatment plant with 3 years and 7 months of continuous service. Due to the introduction of the RO system, a contractor company that completed the work in our plant is going to take over the plant for operation and maintenance as per the contract agreement. Since I am the most junior employee of the company, I am going to be retrenched. What is the retrenchment compensation that I am eligible for?
Note: Company employees on the role - 80, contractor employees - 50, factory license is for 150 employees.
My salary details:
Basic - 6000 / DA - 2400 / HRA - 1800 / Conveyance - 800 / Special Allowance - 1000
1. How many months of notice pay will I get, 3 or 1 month?
2. Compensation for how many years?
3. Will I get gratuity?
Kindly provide me an answer.
Thanks,
Victor (On behalf of an employee)
From India, Madras
Note: Company employees on the role - 80, contractor employees - 50, factory license is for 150 employees.
My salary details:
Basic - 6000 / DA - 2400 / HRA - 1800 / Conveyance - 800 / Special Allowance - 1000
1. How many months of notice pay will I get, 3 or 1 month?
2. Compensation for how many years?
3. Will I get gratuity?
Kindly provide me an answer.
Thanks,
Victor (On behalf of an employee)
From India, Madras
Dear Mr.Victor What is the nature of work done by the employee likely to be retrenched? With regards
From India, Madras
181From India, Madras
Dear Harikrishnan,
The employee who is likely to be retrenched is a mechanic, but he is not qualified for the position. He has been appointed to perform mechanical work in the company based solely on his experience.
Regards,
Victor
From India, Madras
The employee who is likely to be retrenched is a mechanic, but he is not qualified for the position. He has been appointed to perform mechanical work in the company based solely on his experience.
Regards,
Victor
From India, Madras
Dear Mr. Victor,
The individual is entitled to receive one month's notice pay and retrenchment compensation at 15 days' pay for every completed year of service. However, he is not entitled to gratuity as he has not completed five years of continuous service.
With regards,
From India, Madras
The individual is entitled to receive one month's notice pay and retrenchment compensation at 15 days' pay for every completed year of service. However, he is not entitled to gratuity as he has not completed five years of continuous service.
With regards,
From India, Madras
Dear Mr. Soumik,
Please read the post of Mr. Victor. He stated that the workmen employed by the company are as follows: Company employees on role - 80, contractor employees - 50. The factory license is for 150 employees. Mr. Victor mentioned that the company is an effluent treatment plant, thus it must be classified as a factory under the Factories Act. However, the number of company employees is only 80, as indicated by Mr. Victor. Therefore, the provisions of Chapter V B of the Industrial Disputes Act 1947 will not apply to this case, as the number of workmen employed by the company is less than 100 (based on the information provided by Mr. Victor). Consequently, the provisions of Chapter V A will apply. Since Chapter V A is applicable, prior notice to or permission from the government is not necessary in this case. I reiterate that my view is based on the facts provided by Mr. Victor.
For the purpose of Chapter V B, the contractor employees need not be taken into consideration, and only the workmen employed by the company should be considered. This is because the retrenchment is carried out by the company, not by the contractor.
With regards,
From India, Madras
Please read the post of Mr. Victor. He stated that the workmen employed by the company are as follows: Company employees on role - 80, contractor employees - 50. The factory license is for 150 employees. Mr. Victor mentioned that the company is an effluent treatment plant, thus it must be classified as a factory under the Factories Act. However, the number of company employees is only 80, as indicated by Mr. Victor. Therefore, the provisions of Chapter V B of the Industrial Disputes Act 1947 will not apply to this case, as the number of workmen employed by the company is less than 100 (based on the information provided by Mr. Victor). Consequently, the provisions of Chapter V A will apply. Since Chapter V A is applicable, prior notice to or permission from the government is not necessary in this case. I reiterate that my view is based on the facts provided by Mr. Victor.
For the purpose of Chapter V B, the contractor employees need not be taken into consideration, and only the workmen employed by the company should be considered. This is because the retrenchment is carried out by the company, not by the contractor.
With regards,
From India, Madras
Dear Mr. Pon,
Gratuity is a legal entitlement different from retrenchment compensation. If a person who is qualified to get gratuity is retrenched from service, he will receive both gratuity and retrenchment compensation. The rates for both are almost the same. In the case referred to by Mr. Victor, the employee is not entitled to receive gratuity because he had not worked for five years. Therefore, he is entitled to receive retrenchment compensation only.
With regards
From India, Madras
Gratuity is a legal entitlement different from retrenchment compensation. If a person who is qualified to get gratuity is retrenched from service, he will receive both gratuity and retrenchment compensation. The rates for both are almost the same. In the case referred to by Mr. Victor, the employee is not entitled to receive gratuity because he had not worked for five years. Therefore, he is entitled to receive retrenchment compensation only.
With regards
From India, Madras
Dear Mr. Pon,
Whatever Mr. Hariharan said is correct. The gratuity will be paid for those who served 5 years of continuous service, and the retrenchment compensation will be paid for those who served a minimum of 1 year of service and are eligible if retrenched. For resignation cases, the gratuity will be paid, but retrenchment compensation and notice pay will not be paid.
From India, Kumbakonam
Whatever Mr. Hariharan said is correct. The gratuity will be paid for those who served 5 years of continuous service, and the retrenchment compensation will be paid for those who served a minimum of 1 year of service and are eligible if retrenched. For resignation cases, the gratuity will be paid, but retrenchment compensation and notice pay will not be paid.
From India, Kumbakonam
Hi, this is Sumit. I am working with a broking house, and they asked me to resign without any notice. I have been working with this company for the last 3 years and 6 months. Please help me out. What could I do in this case?
From India, Delhi
From India, Delhi
Dear Mr. Harikrishnan,
Mr. Victor has not completed his 5 years and hence he is not eligible for gratuity. My question is where his gratuity amount will be accumulated, which is accountable for his 3 years of service.
From India, Madras
Mr. Victor has not completed his 5 years and hence he is not eligible for gratuity. My question is where his gratuity amount will be accumulated, which is accountable for his 3 years of service.
From India, Madras
Dear Mr. Shankar,
The gratuity amount of any worker does not get accumulated anywhere physically. His employer might have shown the gratuity liability for every year in the "liabilities" column of his books of account. This liability might have been deducted from the "gross profit," and the net profit or net loss would have been arrived at. What happens to this accounting transaction after the retrenchment of the worker who is the subject matter of this discussion, I do not know. I request any expert in Accounting principles to say whether my views are correct.
With regards,
From India, Madras
The gratuity amount of any worker does not get accumulated anywhere physically. His employer might have shown the gratuity liability for every year in the "liabilities" column of his books of account. This liability might have been deducted from the "gross profit," and the net profit or net loss would have been arrived at. What happens to this accounting transaction after the retrenchment of the worker who is the subject matter of this discussion, I do not know. I request any expert in Accounting principles to say whether my views are correct.
With regards,
From India, Madras
Dear Sh. Harikrishnan,
Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 yrs of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any provision with the Labour office to accept such money held against gratuity for employees?
Pon
From India, Lucknow
Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 yrs of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any provision with the Labour office to accept such money held against gratuity for employees?
Pon
From India, Lucknow
Dear Mr. Ponraj,
Even though the CTC is calculated with all the benefits, some allowances and Superannuation Funds will be released only as per the rules. For getting the Gratuity, one must serve at least for 5 years. If one leaves before fulfilling the terms of engagement, then obviously one will lose the benefits. Once you are not eligible to receive the Gratuity, you cannot get it.
From India, Kumbakonam
Even though the CTC is calculated with all the benefits, some allowances and Superannuation Funds will be released only as per the rules. For getting the Gratuity, one must serve at least for 5 years. If one leaves before fulfilling the terms of engagement, then obviously one will lose the benefits. Once you are not eligible to receive the Gratuity, you cannot get it.
From India, Kumbakonam
Bhaskar, My question is different. I am not asking for eligibility. I just asked what my employer told me is right or not? Read my post once again. Pon
From India, Lucknow
From India, Lucknow
It is not required to deposit with anyone in case of resignation cases. It is required only in case of accidental death while on duty and natural death those who worked more than 1 year service.
From India, Kumbakonam
From India, Kumbakonam
Dear Mr. Pon,
The following is your query through your last but one post: "Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 years of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any such provision with the Labour office to accept such money held against gratuity of employees?"
The following is my reply:
1. (a) The Payment of Gratuity Act does not require the employer to deposit the gratuity amount with the statutory bodies/authorities in respect of those who leave the employer's service or resign without completing five years of continuous service.
(b) The Payment of Gratuity Act requires the employer to deposit the gratuity amount with the statutory bodies/authorities only if there is a dispute regarding the person to whom the gratuity amount is payable or the quantum of gratuity payable. This would arise in the case of employees who leave the services of the company, resign, or die while in service after completing five years of continuous service. Once this deposit is made, and the receipt is obtained, the employer's liability concerning the quantum of gratuity deposited is discharged. It is worth noting that if the employer makes a delayed payment of gratuity to an employee, they are liable to pay interest on the gratuity amount, which is extinguished once the deposit is made.
2. The CTC (Cost to the Company), to the best of my knowledge (I am open to correction on this point), is used to assess the company's liability in respect of an employee and is mostly used for costing purposes. CTC has no relevance to the liability under the Payment of Gratuity.
3. Some employers take a group insurance for gratuity liability (I presume I am using the correct phrase here). The company issuing this policy assesses the employer's liability to pay gratuity over a specified period based on the provisions of the Payment of Gratuity Act and, in certain cases, on the rules/regulations in force in the establishment for gratuity payments. It should be noted that if an employee is entitled to better gratuity terms than under the PG Act, those terms will prevail. The age profile of entitled employees is also considered. The Insurance Company collects a premium, invests it, and pays out when gratuity is due, subject to coverage limits. Employers have faced issues when the insurance coverage falls short, leading to legal disputes.
4. In your case, the amount paid to the Insurance company may be represented as a deposit with statutory authorities.
5. In cases without insurance, a "Gratuity Fund" account head is created in the company's books. Gratuity liability for all employees on a particular date is calculated, and the amount is credited to the "Gratuity Fund." If an employee leaves before five years, the calculated amount for that employee is debited from the fund.
I hope this clarifies the issues raised by you.
With regards,
From India, Madras
The following is your query through your last but one post: "Gratuity is part of my CTC, and the amount is held by the employer. When I asked the question during my joining on the status of the gratuity amount if I resign without completing 5 years of service, I was told by them that the money held will be deposited with the statutory bodies. Is there any such provision with the Labour office to accept such money held against gratuity of employees?"
The following is my reply:
1. (a) The Payment of Gratuity Act does not require the employer to deposit the gratuity amount with the statutory bodies/authorities in respect of those who leave the employer's service or resign without completing five years of continuous service.
(b) The Payment of Gratuity Act requires the employer to deposit the gratuity amount with the statutory bodies/authorities only if there is a dispute regarding the person to whom the gratuity amount is payable or the quantum of gratuity payable. This would arise in the case of employees who leave the services of the company, resign, or die while in service after completing five years of continuous service. Once this deposit is made, and the receipt is obtained, the employer's liability concerning the quantum of gratuity deposited is discharged. It is worth noting that if the employer makes a delayed payment of gratuity to an employee, they are liable to pay interest on the gratuity amount, which is extinguished once the deposit is made.
2. The CTC (Cost to the Company), to the best of my knowledge (I am open to correction on this point), is used to assess the company's liability in respect of an employee and is mostly used for costing purposes. CTC has no relevance to the liability under the Payment of Gratuity.
3. Some employers take a group insurance for gratuity liability (I presume I am using the correct phrase here). The company issuing this policy assesses the employer's liability to pay gratuity over a specified period based on the provisions of the Payment of Gratuity Act and, in certain cases, on the rules/regulations in force in the establishment for gratuity payments. It should be noted that if an employee is entitled to better gratuity terms than under the PG Act, those terms will prevail. The age profile of entitled employees is also considered. The Insurance Company collects a premium, invests it, and pays out when gratuity is due, subject to coverage limits. Employers have faced issues when the insurance coverage falls short, leading to legal disputes.
4. In your case, the amount paid to the Insurance company may be represented as a deposit with statutory authorities.
5. In cases without insurance, a "Gratuity Fund" account head is created in the company's books. Gratuity liability for all employees on a particular date is calculated, and the amount is credited to the "Gratuity Fund." If an employee leaves before five years, the calculated amount for that employee is debited from the fund.
I hope this clarifies the issues raised by you.
With regards,
From India, Madras
Hello,
I recently got retrenched and paid a severance package of 3 months (3 years of service completed). The problem is the company has deducted tax on it, and they haven't given Form-16 yet. How can I claim the tax benefit under Section 25F(b) (15 days for every year)? Does the Form 16 must say the word 'Retrenchment Benefit'? Do the companies that are laying off people need to take special permission from somewhere (maybe the labor department or anywhere) before they can add the word 'retrenchment' in Form 16?
Regarding the tax benefit, does 15 days' salary mean monthly salary or only Basic + DA? Kindly help.
I recently got retrenched and paid a severance package of 3 months (3 years of service completed). The problem is the company has deducted tax on it, and they haven't given Form-16 yet. How can I claim the tax benefit under Section 25F(b) (15 days for every year)? Does the Form 16 must say the word 'Retrenchment Benefit'? Do the companies that are laying off people need to take special permission from somewhere (maybe the labor department or anywhere) before they can add the word 'retrenchment' in Form 16?
Regarding the tax benefit, does 15 days' salary mean monthly salary or only Basic + DA? Kindly help.
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Gratuity Eligibility.pdf
Abstr-pay-gratu ity.doc