Dear R.N.Khola, Is Training period of service is count under the gratuity ?? Like Training 1 year + service 4 year = 5 year (is eligible for gratuity ) regards, ashish
From United States, Santa Clara
From United States, Santa Clara
Re: Applicability of Payment of Gratuity Act to Contract Labor
Dear R.N. Khola,
Is the training period of service counted under the gratuity? For example, if the training period is 1 year and the actual service period is 4 years, would the total of 5 years be eligible for gratuity?
Regards,
Ashish
From United States, Santa Clara
Dear R.N. Khola,
Is the training period of service counted under the gratuity? For example, if the training period is 1 year and the actual service period is 4 years, would the total of 5 years be eligible for gratuity?
Regards,
Ashish
From United States, Santa Clara
Dear Ashish,
Before giving any opinion, we should go through the definition of the employee, which may be read as under:
Sec 2 (e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity. However, it does not include any person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
After going through the definition, it is clear that an apprentice is not covered under this Act. However, it seems to me that we are not to consider the length of service of a trainee if they do not perform any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work. If a person is appointed as a trainee under the IE (SO) Act, 1946/CSO and performs work of any of the aforementioned nature as part of the training scheme, then, in my opinion, this period of service should not be considered as service rendered for counting towards the service period for payment of gratuity.
Generally, after the completion of the trainee period, if a vacancy arises, the management may re-employ them after clearing the Full and Final (F&F) settlement and following the interview procedure. Following this procedure, there is no need to consider this service period. Therefore, if a person is appointed as a trainee and performs any of the mentioned works, then their service should be considered in the length of service for the gratuity consideration. Ultimately, it depends on the Authorities under the Act how they interpret the matter at hand, but the situation appears more favorable for a person who has worked as a trainee and is in continuity of service.
Opinion/comments submitted as requested.
Regards,
R.N.Khola
Labour Law Consultants (m)
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Ashish,
Is the training period of service counted under gratuity? For example, Training for 1 year + 4 years of service = 5 years (eligible for gratuity).
Regards,
Ashish
From India, Delhi
421Before giving any opinion, we should go through the definition of the employee, which may be read as under:
Sec 2 (e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity. However, it does not include any person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
After going through the definition, it is clear that an apprentice is not covered under this Act. However, it seems to me that we are not to consider the length of service of a trainee if they do not perform any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work. If a person is appointed as a trainee under the IE (SO) Act, 1946/CSO and performs work of any of the aforementioned nature as part of the training scheme, then, in my opinion, this period of service should not be considered as service rendered for counting towards the service period for payment of gratuity.
Generally, after the completion of the trainee period, if a vacancy arises, the management may re-employ them after clearing the Full and Final (F&F) settlement and following the interview procedure. Following this procedure, there is no need to consider this service period. Therefore, if a person is appointed as a trainee and performs any of the mentioned works, then their service should be considered in the length of service for the gratuity consideration. Ultimately, it depends on the Authorities under the Act how they interpret the matter at hand, but the situation appears more favorable for a person who has worked as a trainee and is in continuity of service.
Opinion/comments submitted as requested.
Regards,
R.N.Khola
Labour Law Consultants (m)
---
Ashish,
Is the training period of service counted under gratuity? For example, Training for 1 year + 4 years of service = 5 years (eligible for gratuity).
Regards,
Ashish
From India, Delhi
Dear Sir,
I have a problem and would be glad if you could help me solve it. Is a part-time (permanent) employee covered under the definition of an employee u/s 2(e) of the Payment of Gratuity Act 1972? If possible, please cite a Supreme Court judgment on the matter.
Thanks and Regards,
From India, Mumbai
I have a problem and would be glad if you could help me solve it. Is a part-time (permanent) employee covered under the definition of an employee u/s 2(e) of the Payment of Gratuity Act 1972? If possible, please cite a Supreme Court judgment on the matter.
Thanks and Regards,
From India, Mumbai
Gratuity is payable by the employer, and in case the employer fails to do so, the principal employer has to pay the gratuity to the contract labor upon completion of the contract with the contractor.
Shrikant
From India, Delhi
Shrikant
From India, Delhi
Respected Sir,
My name is Sunil Khandelwal. i am residing at scheme no. 78, Indore. I worked with Reliance Telecom, Indore on contract in with Balaji Group in the period - Oct-2002 to March 2009.
I am eligible for gratuity but Balaji Group denied to pay gratuity. I file the case in 2010 in labor court but decision still pending. please give me your most help full suggestions .
From India, Indore
My name is Sunil Khandelwal. i am residing at scheme no. 78, Indore. I worked with Reliance Telecom, Indore on contract in with Balaji Group in the period - Oct-2002 to March 2009.
I am eligible for gratuity but Balaji Group denied to pay gratuity. I file the case in 2010 in labor court but decision still pending. please give me your most help full suggestions .
From India, Indore
Respected Sir,
My name is Sunil Khandelwal. I am residing at scheme no. 78, Indore. I worked with Reliance Telecom, Indore on contract with Balaji Group in the period from Oct-2002 to March 2009. I am eligible for gratuity, but Balaji Group denied to pay gratuity. I filed the case in 2010 in the labor court, but the decision is still pending. Please give me your most helpful suggestions.
From India, Indore
My name is Sunil Khandelwal. I am residing at scheme no. 78, Indore. I worked with Reliance Telecom, Indore on contract with Balaji Group in the period from Oct-2002 to March 2009. I am eligible for gratuity, but Balaji Group denied to pay gratuity. I filed the case in 2010 in the labor court, but the decision is still pending. Please give me your most helpful suggestions.
From India, Indore
I am not an HR expert, but my observation is that whether PE has to pay Gratuity to Contract Labourers depends on the Jurisdiction. If you are in Kerala or Bengal, you don't have to pay. If you are in TN, you have to pay. Everywhere else, you can pay or abstain from paying. As a lawyer, I think the correct position of the law is you don't have to pay.
The distinction between an employer and a principal employer has not been recognized anywhere in the Payment of Gratuity Act 1972. As per Sec 2 (f)(iii) of the Act, an employer means any person who has ultimate authority over the affairs of the establishment.
The Act does not define establishment, and this has created some confusion. In the case of Sailen Seth vs Deputy Labour Commissioner, Calcutta HC referred to the definition of establishment in Shops and Establishment Act and observed that the contractor, being registered under the S and E Act, has the responsibility to pay gratuity to its contract laborer. Similar decisions have been rendered by Kerala HC in a few cases. A contrary view has been taken by the TN HC, by observing that gratuity is wages as per Clause 2(d) of the Payment of Wages Act. Sec 2(d) opens with the words 'any sum which by reason of the termination of employment of the person employed is payable under any law.' But since neither the gratuity act nor any other law prescribes payment of gratuity to the contract laborer, it is not wages. More fundamentally, to constitute a payment under Sec 2(d) of the Payment of Wages Act, there needs to be termination of employment. There is no employer-employee relationship between the contract laborer and the principal employer. Even after the contract laborer stops rendering his service in the premises of the Principal Employer, he continues to be in the employment of the contractor, and the contractor has the discretion of deploying him elsewhere, so there is no termination of employment of a contract laborer even if he is not being deployed on the premises of the Principal Employer.
Hoping I have not confused the HR folks.
Arun Sasi
From India, Jamshedpur
The distinction between an employer and a principal employer has not been recognized anywhere in the Payment of Gratuity Act 1972. As per Sec 2 (f)(iii) of the Act, an employer means any person who has ultimate authority over the affairs of the establishment.
The Act does not define establishment, and this has created some confusion. In the case of Sailen Seth vs Deputy Labour Commissioner, Calcutta HC referred to the definition of establishment in Shops and Establishment Act and observed that the contractor, being registered under the S and E Act, has the responsibility to pay gratuity to its contract laborer. Similar decisions have been rendered by Kerala HC in a few cases. A contrary view has been taken by the TN HC, by observing that gratuity is wages as per Clause 2(d) of the Payment of Wages Act. Sec 2(d) opens with the words 'any sum which by reason of the termination of employment of the person employed is payable under any law.' But since neither the gratuity act nor any other law prescribes payment of gratuity to the contract laborer, it is not wages. More fundamentally, to constitute a payment under Sec 2(d) of the Payment of Wages Act, there needs to be termination of employment. There is no employer-employee relationship between the contract laborer and the principal employer. Even after the contract laborer stops rendering his service in the premises of the Principal Employer, he continues to be in the employment of the contractor, and the contractor has the discretion of deploying him elsewhere, so there is no termination of employment of a contract laborer even if he is not being deployed on the premises of the Principal Employer.
Hoping I have not confused the HR folks.
Arun Sasi
From India, Jamshedpur
Gratuity is payable even to a causal or temporary employee. Baban Vs The Estate Manager, Maharashtra State Farming corporation Ltd 2016, LLR 1140 (Bom. HC)
From India, Mumbai
From India, Mumbai
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