Hello Friends,
I have a query with regard to gratuity payment. What is the rule on the payment of gratuity for an employee who has been transferred within a group company and now decides to quit the group after serving for 3 years, with 2 of those years being with the parent company? Is he entitled to gratuity or will it be considered as a new company?
From India, Mumbai
I have a query with regard to gratuity payment. What is the rule on the payment of gratuity for an employee who has been transferred within a group company and now decides to quit the group after serving for 3 years, with 2 of those years being with the parent company? Is he entitled to gratuity or will it be considered as a new company?
From India, Mumbai
Dear Mr. Govind,
I agree with your view, but my efforts to convince management have been futile as they say that the companies to which they have been transferred do not state being a sister or group company. Therefore, they would not be entitled to gratuity. Is there any workaround to prove to management that they are wrong?
Thanks,
Regards
From India, Mumbai
I agree with your view, but my efforts to convince management have been futile as they say that the companies to which they have been transferred do not state being a sister or group company. Therefore, they would not be entitled to gratuity. Is there any workaround to prove to management that they are wrong?
Thanks,
Regards
From India, Mumbai
Dear Friend,
If you have transferred the employee to your sister concern, you are liable to pay the gratuity. Where are you maintaining the gratuity registers? If you need more clarification, you can call me.
Lakshminaryana
9866917232
From India, Hyderabad
If you have transferred the employee to your sister concern, you are liable to pay the gratuity. Where are you maintaining the gratuity registers? If you need more clarification, you can call me.
Lakshminaryana
9866917232
From India, Hyderabad
Dear Lakshminarayana,
One company is named Mr. A, and the second company is named Mr. AB. The issue at hand is that Raju is an employee of Mr. A company, and he has been transferred to Mr. AB company. Both company managements are the same. Raju has worked for 3 years in Mr. A and 4 years in Mr. AB. My question is: Is Raju eligible to claim the gratuity amount from Mr. AB company, considering his total services of 5 years with Mr. AB?
Please explain the above case study.
M. Chaitanya Krishna
From India, Nellore
One company is named Mr. A, and the second company is named Mr. AB. The issue at hand is that Raju is an employee of Mr. A company, and he has been transferred to Mr. AB company. Both company managements are the same. Raju has worked for 3 years in Mr. A and 4 years in Mr. AB. My question is: Is Raju eligible to claim the gratuity amount from Mr. AB company, considering his total services of 5 years with Mr. AB?
Please explain the above case study.
M. Chaitanya Krishna
From India, Nellore
I think Mr. Chaitany has portrayed the case very well. The transfer letter has been issued by the HR Director and states that the other terms and conditions remain the same.
However, the total work period of the employee in the parent company stands at 2 years, and in the second company, it is 3 plus years. Now, the management is not willing to pay gratuity, stating that the period starts from the transfer to the second company and not from the beginning.
Please advise and share any law that clarifies the same under the gratuity scheme!
From India, Mumbai
However, the total work period of the employee in the parent company stands at 2 years, and in the second company, it is 3 plus years. Now, the management is not willing to pay gratuity, stating that the period starts from the transfer to the second company and not from the beginning.
Please advise and share any law that clarifies the same under the gratuity scheme!
From India, Mumbai
Thank you Sir, Appreciate your efforts.I shall await your feedback and quote from the legal book so that the employees Interest can be taken care of correctly. Regards, Saikumar S
From India, Mumbai
From India, Mumbai
Dear Sai,
I am enclosing two attachments that will meet your needs. These are the two judgments given by the Madras High Court, where the meaning of "Employee" has been elaborated. You may share them with your management to clarify any doubts they may have and to assist the person in need.
Regards,
P. Vathiraj
From India
I am enclosing two attachments that will meet your needs. These are the two judgments given by the Madras High Court, where the meaning of "Employee" has been elaborated. You may share them with your management to clarify any doubts they may have and to assist the person in need.
Regards,
P. Vathiraj
From India
Dear Mr Vaithiraj, Thank you for the feedback.I would need to speak to you for further clarification. Can i have your contact details please? Regards,
From India, Mumbai
From India, Mumbai
Dear Sai, My mobile no. is 9585 333 344. I am presently staying in Chennai. For any clarification, please feel free to call me. Whatever I know, I will update you. Regards, P. Vathiraj
From India
From India
Dear,
With reference to your query regarding payment of gratuity for the service rendered to the group companies, if the management of the companies is ignoring your legal dues, you have an option to file a claim under the Payment of Gratuity Act. Keep in mind to make both group companies respondents. Obviously, these group companies will comply and fulfill their obligations. You are eligible for gratuity amounting to Rs. 15 days' salary per year. The calculation will be done as per the provisions of the Gratuity Act, i.e., your basic salary multiplied by 15/26 times the number of years of service.
Regards,
R B Yadav
Advocate
From India, Gurugram
With reference to your query regarding payment of gratuity for the service rendered to the group companies, if the management of the companies is ignoring your legal dues, you have an option to file a claim under the Payment of Gratuity Act. Keep in mind to make both group companies respondents. Obviously, these group companies will comply and fulfill their obligations. You are eligible for gratuity amounting to Rs. 15 days' salary per year. The calculation will be done as per the provisions of the Gratuity Act, i.e., your basic salary multiplied by 15/26 times the number of years of service.
Regards,
R B Yadav
Advocate
From India, Gurugram
Dear,
Gratuity is payable to a person if they work for a minimum period of 5 years in the same company, whether it is a parent company or sister company, but the management must be the same. Records must be maintained by the HO.
Regards,
Hari
From India, Mumbai
Gratuity is payable to a person if they work for a minimum period of 5 years in the same company, whether it is a parent company or sister company, but the management must be the same. Records must be maintained by the HO.
Regards,
Hari
From India, Mumbai
I have one more query. When do you call the managements of two companies the same? How do you prove that the managements are the same? The structure of the group companies is created in such a manner that it becomes difficult to prove the same management.
From India, Mumbai
From India, Mumbai
Also, my employer deducts the gratuity amount from my CTC. Can I claim this amount even if I were to leave the company before 5 years, as in this case the money is coming from my CTC and is not being contributed by the employer.
From India, Mumbai
From India, Mumbai
Dear Sai,
Regarding your CTC query, please understand that the CTC is the Cost to the Company for employing you in this organization. It is nothing but a budget forecast. Your CTC should be understood as follows:
- Basic components such as Basic, HRA, Conveyance, Children Education Allowance, and any flexi balance.
- Reimbursements such as Medical Reimbursement Allowance, LTC, and for entertainment allowance like Books & periodicals.
- Benefits like PF, Gratuity, GPA, Mediclaim policy, Bonus, or Ex-gratia.
Out of the above, the Basic components and the Reimbursement form the Gross salary, which is your actual salary from which your part of PF is deducted, and the net pay is given.
The other part, i.e., "Benefits," is given by the employer to you in the form of Retiral benefits like PF (employer's share), gratuity, Bonus, or Ex-gratia, and the medical benefits like GPA and Mediclaim, etc., which are a statutory expenditure for the employer for employing you in the organization. These expenses have to be accounted somewhere, and the word CTC has been born. Please remember, Gratuity is not deducted from your basic components and reimbursement allowances.
It is the employee who misunderstands the concept of CTC and not the employer. In the future, when you are informed of CTC by the HR staff, kindly check the gross and net pay and do not get excited about the CTC amount. Many companies have different benefit structures, and accordingly, the CTC will vary.
I hope your doubts regarding CTC are cleared.
Regards,
P. Vathiraj
From India
Regarding your CTC query, please understand that the CTC is the Cost to the Company for employing you in this organization. It is nothing but a budget forecast. Your CTC should be understood as follows:
- Basic components such as Basic, HRA, Conveyance, Children Education Allowance, and any flexi balance.
- Reimbursements such as Medical Reimbursement Allowance, LTC, and for entertainment allowance like Books & periodicals.
- Benefits like PF, Gratuity, GPA, Mediclaim policy, Bonus, or Ex-gratia.
Out of the above, the Basic components and the Reimbursement form the Gross salary, which is your actual salary from which your part of PF is deducted, and the net pay is given.
The other part, i.e., "Benefits," is given by the employer to you in the form of Retiral benefits like PF (employer's share), gratuity, Bonus, or Ex-gratia, and the medical benefits like GPA and Mediclaim, etc., which are a statutory expenditure for the employer for employing you in the organization. These expenses have to be accounted somewhere, and the word CTC has been born. Please remember, Gratuity is not deducted from your basic components and reimbursement allowances.
It is the employee who misunderstands the concept of CTC and not the employer. In the future, when you are informed of CTC by the HR staff, kindly check the gross and net pay and do not get excited about the CTC amount. Many companies have different benefit structures, and accordingly, the CTC will vary.
I hope your doubts regarding CTC are cleared.
Regards,
P. Vathiraj
From India
Dear Sai ji,
I suggest that you should first write a letter to your company stating that you worked with company A from this date to this date and with company B from this date to this date. Your services were transferred from company A to company B not at the instant of you but at the instant of management of company A and company B. The management of company A and company B is one and the same. There is no break in your service with company A and company B, and thus you have continuous service of more than 5 years. Under the circumstances, you are liable for Gratuity under the Act. Request the company to settle your claim of Gratuity at the earliest. Take acknowledgment of the letter. If the company denies your claim, write to the authority under the Act. You should get your Gratuity. It is your right if the above things are established.
All the best.
From India, Mumbai
I suggest that you should first write a letter to your company stating that you worked with company A from this date to this date and with company B from this date to this date. Your services were transferred from company A to company B not at the instant of you but at the instant of management of company A and company B. The management of company A and company B is one and the same. There is no break in your service with company A and company B, and thus you have continuous service of more than 5 years. Under the circumstances, you are liable for Gratuity under the Act. Request the company to settle your claim of Gratuity at the earliest. Take acknowledgment of the letter. If the company denies your claim, write to the authority under the Act. You should get your Gratuity. It is your right if the above things are established.
All the best.
From India, Mumbai
Dear Sai2967,
In a case of transfer within a group company, the services rendered by the concerned employee with the previous company and the present one should be added together. If the aggregate of both periods is above 5 years, the employee in question is entitled to Gratuity Payment.
The most important thing to note is that the Date of Appointment does not change in a case of transfer. Since the later employer accepted the transfer voluntarily, they are liable to pay it.
PKJAIN
From India, Delhi
In a case of transfer within a group company, the services rendered by the concerned employee with the previous company and the present one should be added together. If the aggregate of both periods is above 5 years, the employee in question is entitled to Gratuity Payment.
The most important thing to note is that the Date of Appointment does not change in a case of transfer. Since the later employer accepted the transfer voluntarily, they are liable to pay it.
PKJAIN
From India, Delhi
Dear Sai,
I am enclosing two attachments that will suffice your needs. Those are the two judgments given by Madras High Court, wherein the meaning of an employee has been elaborated. You may show it to your management to get their doubts cleared and help the needy person.
Regards,
P. Vathiraj
Dear Vathiraj ji,
I have one doubt about PF. If an employee X is receiving a salary of INR 50,000 from the company. Mr. X informed the HR department not to deduct EPF contributions from his salary, but his salary is mentioned in the monthly salary statement. What are the legal problems that may arise for the EPF department?
In the scenario where, based on minimum wage and EPF rules, we are deducting the EPF amount from his salary, the employees might take action against the management, and below 10 employees could gather to stop work.
What actions should be taken in both cases? Please suggest.
M. Chaitanya Krishna
From India, Nellore
I am enclosing two attachments that will suffice your needs. Those are the two judgments given by Madras High Court, wherein the meaning of an employee has been elaborated. You may show it to your management to get their doubts cleared and help the needy person.
Regards,
P. Vathiraj
Dear Vathiraj ji,
I have one doubt about PF. If an employee X is receiving a salary of INR 50,000 from the company. Mr. X informed the HR department not to deduct EPF contributions from his salary, but his salary is mentioned in the monthly salary statement. What are the legal problems that may arise for the EPF department?
In the scenario where, based on minimum wage and EPF rules, we are deducting the EPF amount from his salary, the employees might take action against the management, and below 10 employees could gather to stop work.
What actions should be taken in both cases? Please suggest.
M. Chaitanya Krishna
From India, Nellore
Dear Mr. Chaitanya,
I am not clear on your query. However, regarding the deduction of PF for employees earning more than Rs. 6500/- (Basic, DA, Retaining allowances (if any), and cash value of food concession admissible thereon) per month, I would like to draw your attention to para 2 (f) of EPF Scheme, 1952, which defines the "excluded employee" as follows:
Para 2 (f) "Excluded employee" means:
(i) An employee who, having withdrawn the full amount of his accumulations in the Fund under clause (a) or (c) of sub-paragraph (1) of paragraph 69;
(ii) An employee whose pay, at the time he is eligible to become a member of the Fund, exceeds Six Thousand and Five Hundred Rupees per month.
Sub-paragraph (1) of Paragraph 69 of EPF Scheme 1952 outlines the circumstances in which accumulations in the Fund are payable to a member, with various clauses specifying withdrawal conditions for the PF amount.
For exclusion from paying the contribution, only clauses (a) and (c) of sub-paragraph (1) of paragraph 69 above should be considered, pertaining to:
Clause (a) - Retirement from service after attaining the age of 55 years;
Clause (c) - Migration from India for permanent settlement abroad or for employment abroad.
One can be excluded from paying the PF contribution if retiring or moving abroad, even if earning above Rs. 6500/- per month. Conversely, a fresher starting with a salary of Rs. 6500/- may also qualify as an "excluded employee."
While the act allows withdrawal of PF contributions upon resignation, invalidment, termination, or retrenchment, these instances do not qualify for the "excluded employee" status in new employment.
To seek exclusion from contribution, Form 11 must be completed, detailing previous employment and contribution status. Failure to comply with the clauses for excluded employees may lead to rejection by PF authorities unless convincing arguments are presented.
If you require further clarification on PF contributions, feel free to contact me at 9585333344. I am located in Chennai.
Regards,
P. Vathiraj
From India
I am not clear on your query. However, regarding the deduction of PF for employees earning more than Rs. 6500/- (Basic, DA, Retaining allowances (if any), and cash value of food concession admissible thereon) per month, I would like to draw your attention to para 2 (f) of EPF Scheme, 1952, which defines the "excluded employee" as follows:
Para 2 (f) "Excluded employee" means:
(i) An employee who, having withdrawn the full amount of his accumulations in the Fund under clause (a) or (c) of sub-paragraph (1) of paragraph 69;
(ii) An employee whose pay, at the time he is eligible to become a member of the Fund, exceeds Six Thousand and Five Hundred Rupees per month.
Sub-paragraph (1) of Paragraph 69 of EPF Scheme 1952 outlines the circumstances in which accumulations in the Fund are payable to a member, with various clauses specifying withdrawal conditions for the PF amount.
For exclusion from paying the contribution, only clauses (a) and (c) of sub-paragraph (1) of paragraph 69 above should be considered, pertaining to:
Clause (a) - Retirement from service after attaining the age of 55 years;
Clause (c) - Migration from India for permanent settlement abroad or for employment abroad.
One can be excluded from paying the PF contribution if retiring or moving abroad, even if earning above Rs. 6500/- per month. Conversely, a fresher starting with a salary of Rs. 6500/- may also qualify as an "excluded employee."
While the act allows withdrawal of PF contributions upon resignation, invalidment, termination, or retrenchment, these instances do not qualify for the "excluded employee" status in new employment.
To seek exclusion from contribution, Form 11 must be completed, detailing previous employment and contribution status. Failure to comply with the clauses for excluded employees may lead to rejection by PF authorities unless convincing arguments are presented.
If you require further clarification on PF contributions, feel free to contact me at 9585333344. I am located in Chennai.
Regards,
P. Vathiraj
From India
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