Dear All,
Subject: How Can I Claim Gratuity Amount?
I had served in a private limited organization in the Industrial Area of Chandigarh for more than 11 years with zero benefits (no PF/Leave encashment/bonus/no increment for the last 3 years).
In addition to this, I received an appointment letter by email (no hard copy).
I resigned from that organization on the 6th of May with a notice period of 30 days (from 6th April to 6th May). Now, I want to claim the Gratuity amount. Please specify if I am eligible to claim that benefit.
About the Company,
The registered office is in Chandigarh with approximately 8-10 staff members and a manufacturing unit in Baddi with more than 40 employees.
Please guide accordingly on the procedure of filing and the required days.
Thank you.
From India, Chandigarh
Subject: How Can I Claim Gratuity Amount?
I had served in a private limited organization in the Industrial Area of Chandigarh for more than 11 years with zero benefits (no PF/Leave encashment/bonus/no increment for the last 3 years).
In addition to this, I received an appointment letter by email (no hard copy).
I resigned from that organization on the 6th of May with a notice period of 30 days (from 6th April to 6th May). Now, I want to claim the Gratuity amount. Please specify if I am eligible to claim that benefit.
About the Company,
The registered office is in Chandigarh with approximately 8-10 staff members and a manufacturing unit in Baddi with more than 40 employees.
Please guide accordingly on the procedure of filing and the required days.
Thank you.
From India, Chandigarh
Dear,
Gratuity is applicable to any factory, shop, and establishment where 10 or more employees are employed on any day of the preceding 12 months. Any employee (other than an apprentice) who is employed on wages and has rendered continuous service for not less than five years (in case of death or disablement, continuous service shall not be applicable). Since you have been employed there for about 11 years, you are certainly eligible for gratuity. You may apply in Form No. I of gratuity. If your employer does not show any interest, you may consult the Labour Commissioner for the same.
Thanks,
S. Kumar
From India, New Delhi
6Gratuity is applicable to any factory, shop, and establishment where 10 or more employees are employed on any day of the preceding 12 months. Any employee (other than an apprentice) who is employed on wages and has rendered continuous service for not less than five years (in case of death or disablement, continuous service shall not be applicable). Since you have been employed there for about 11 years, you are certainly eligible for gratuity. You may apply in Form No. I of gratuity. If your employer does not show any interest, you may consult the Labour Commissioner for the same.
Thanks,
S. Kumar
From India, New Delhi
The Payment of Gratuity Act 1972 applies to:
(a) ...
(b) ...
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months...
Presuming that the Chandigarh Office had 10 or more employees, the Act would apply. The employer is required to pay you gratuity; you are not required to take any action for this as per the Payment of Gratuity Act 1972. If they do not pay you, you can send a letter demanding its payment and endorse a copy thereof to the Labour Department (The Controlling authority as per PGA). It is surprising as to how the employer could successfully evade PF all along for more than 11 years.
From India, Mumbai
(a) ...
(b) ...
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months...
Presuming that the Chandigarh Office had 10 or more employees, the Act would apply. The employer is required to pay you gratuity; you are not required to take any action for this as per the Payment of Gratuity Act 1972. If they do not pay you, you can send a letter demanding its payment and endorse a copy thereof to the Labour Department (The Controlling authority as per PGA). It is surprising as to how the employer could successfully evade PF all along for more than 11 years.
From India, Mumbai
First, the poster has to send a notice of claim for gratuity in the prescribed format to the employer by registered post.
Secondly, if no reply is received from the employer or the claim is rejected for whatever reason, or the amount of gratuity mentioned in the reply is disputable on grounds like last drawn salary, length of qualifying service, etc., the poster should file his claim for gratuity with the copy of the claim submitted to the employer, his acknowledgment, reply if any received, etc., to the Controlling Authority for the area where he worked last.
The formats of the forms mentioned above should be as per the Central or State Gratuity Rules as applicable to the establishment.
Other grievances like non-inclusion into EPF, non-payment of bonus, leave encashment, non-sanction of increments, etc., have to be dealt with separately.
Ideally, the poster should engage the services of an advocate.
From India, Salem
Secondly, if no reply is received from the employer or the claim is rejected for whatever reason, or the amount of gratuity mentioned in the reply is disputable on grounds like last drawn salary, length of qualifying service, etc., the poster should file his claim for gratuity with the copy of the claim submitted to the employer, his acknowledgment, reply if any received, etc., to the Controlling Authority for the area where he worked last.
The formats of the forms mentioned above should be as per the Central or State Gratuity Rules as applicable to the establishment.
Other grievances like non-inclusion into EPF, non-payment of bonus, leave encashment, non-sanction of increments, etc., have to be dealt with separately.
Ideally, the poster should engage the services of an advocate.
From India, Salem
Interesting point here.
The office where he is working has fewer than 10 employees (as it appears from the post above). In that case, will the employer be free to deny gratuity to him, even though the establishment in total has more than 10 employees?
Because the section says "Establishment," not company.
From India, Mumbai
The office where he is working has fewer than 10 employees (as it appears from the post above). In that case, will the employer be free to deny gratuity to him, even though the establishment in total has more than 10 employees?
Because the section says "Establishment," not company.
From India, Mumbai
Yes, Mr. Saswata, I noticed and observed.
But on the same point, a member has mentioned "mfg. unit in Baddi with more than 40+ employees." This indicates that the total number of the establishment is more than 10, meaning the establishment is covered under the POG Act, 1972.
Because the establishment is controlling the manufacturing unit (being HO/Corporate Office) and the revenue source is the same, hence I assumed both are with the same name. Otherwise, what is the earning source for the establishment where 8-10 people are working.
Dear Mr. Pharmadesigner,
Before experts give different opinions, please clarify some basic doubts.
1. Whether both establishments are working with the same name or a different name.
2. Even if they are working with a different name, please confirm whether at any point in time there were 10 or more employees engaged in your company. If this is proved, your establishment is still liable to pay Gratuity.
3. Whether, as per the Act, your establishment has paid Gratuity to any previous employee?
Hope the answers to the above doubts will have a major impact on the opinions.
From India, Delhi
But on the same point, a member has mentioned "mfg. unit in Baddi with more than 40+ employees." This indicates that the total number of the establishment is more than 10, meaning the establishment is covered under the POG Act, 1972.
Because the establishment is controlling the manufacturing unit (being HO/Corporate Office) and the revenue source is the same, hence I assumed both are with the same name. Otherwise, what is the earning source for the establishment where 8-10 people are working.
Dear Mr. Pharmadesigner,
Before experts give different opinions, please clarify some basic doubts.
1. Whether both establishments are working with the same name or a different name.
2. Even if they are working with a different name, please confirm whether at any point in time there were 10 or more employees engaged in your company. If this is proved, your establishment is still liable to pay Gratuity.
3. Whether, as per the Act, your establishment has paid Gratuity to any previous employee?
Hope the answers to the above doubts will have a major impact on the opinions.
From India, Delhi
Hi Mr. Dangwal,
So, if the factory is in the name of XYZ Ltd, and the office is also in the name of XYZ Ltd, does that mean they will be counted as a single establishment?
Section 3(b) states: "Every shop or establishment within the meaning of any law for the time being in force, in relation to shop & establishment in a state, in which 10 or more persons are employed, or were employed on any day of the preceding 12 months."
This indicates that each establishment with its independent shop & establishment license needs to have 10 or more employees and not that you should add the number of employees at the factory (which is separately provided for in Section 3(a).
Logically, an employer should not be allowed to escape the liability this way, but the wording of the act seems to give the option as it does not refer to the company or the firm but to each establishment independently.
From India, Mumbai
So, if the factory is in the name of XYZ Ltd, and the office is also in the name of XYZ Ltd, does that mean they will be counted as a single establishment?
Section 3(b) states: "Every shop or establishment within the meaning of any law for the time being in force, in relation to shop & establishment in a state, in which 10 or more persons are employed, or were employed on any day of the preceding 12 months."
This indicates that each establishment with its independent shop & establishment license needs to have 10 or more employees and not that you should add the number of employees at the factory (which is separately provided for in Section 3(a).
Logically, an employer should not be allowed to escape the liability this way, but the wording of the act seems to give the option as it does not refer to the company or the firm but to each establishment independently.
From India, Mumbai
Dear Saswata Banerjee,
The term 'establishment' has not been defined under the PGA 1972; rather, it has been indicated what an establishment is by way of exhaustive illustrations under Section 3 of the Act. We all know that a company registered under the Companies Act is a separate legal entity with an independent existence from its owners. As such, it can run different forms of establishments under its own common name or in different names. What is important is whether it is an organic whole in terms of its overall administration and business operations in an integrated manner.
In other words, if the company is a cluster or conglomeration of different establishments with a common accounting system or balance sheet, the number of employees employed in a particular branch or establishment is to be ignored, and the total number of employees in the company as a whole is to be taken into account for the purpose of the PGA, 1972.
Basically, a shop or establishment is defined as such with reference to the premises or place where the activities of buying, selling commodities, or rendering commercial services to the members of the general public or internal administrative functions are carried out. For example, the company XYZ Ltd is engaged in retail sales of consumer goods and has different branches in different states and warehouses where cleaning and packaging of goods are done separately. It is not necessary to look into the total number of employees of such individual units for the applicability of the PGA, 1972.
Therefore, my submission is that logically and legally, these branches or units of the same company are not independent of the company that owns and runs them for the purpose of the PGA, 1972.
From India, Salem
The term 'establishment' has not been defined under the PGA 1972; rather, it has been indicated what an establishment is by way of exhaustive illustrations under Section 3 of the Act. We all know that a company registered under the Companies Act is a separate legal entity with an independent existence from its owners. As such, it can run different forms of establishments under its own common name or in different names. What is important is whether it is an organic whole in terms of its overall administration and business operations in an integrated manner.
In other words, if the company is a cluster or conglomeration of different establishments with a common accounting system or balance sheet, the number of employees employed in a particular branch or establishment is to be ignored, and the total number of employees in the company as a whole is to be taken into account for the purpose of the PGA, 1972.
Basically, a shop or establishment is defined as such with reference to the premises or place where the activities of buying, selling commodities, or rendering commercial services to the members of the general public or internal administrative functions are carried out. For example, the company XYZ Ltd is engaged in retail sales of consumer goods and has different branches in different states and warehouses where cleaning and packaging of goods are done separately. It is not necessary to look into the total number of employees of such individual units for the applicability of the PGA, 1972.
Therefore, my submission is that logically and legally, these branches or units of the same company are not independent of the company that owns and runs them for the purpose of the PGA, 1972.
From India, Salem
Dear Saswata,
I fully agree with Umakanthan, sir.
The legal entity of any establishment can't be treated as "separate" merely on the basis of establishing different units/offices at different places/states for different work. If the legal status and other registrations of all branches/offices are operating with the same name, then employees of all places would be counted as single establishment employees.
Accordingly, Gratuity will also be equally applicable for all.
From India, Delhi
I fully agree with Umakanthan, sir.
The legal entity of any establishment can't be treated as "separate" merely on the basis of establishing different units/offices at different places/states for different work. If the legal status and other registrations of all branches/offices are operating with the same name, then employees of all places would be counted as single establishment employees.
Accordingly, Gratuity will also be equally applicable for all.
From India, Delhi
Thank you Umakanthan sir for the clarification. Would you by any chance know of any court cases on this matter?
From India, Mumbai
From India, Mumbai
In fact, I searched for some case laws in this regard, Saswata, but in vain. A case law I came across some time back addressed the question of the appropriate government, whether Central or State, in respect of a factory being operated in a different State but owned by a Limited Company registered and functioning from another State. The ruling held that the appropriate government was the State Government, distinguishing a factory under section 3(a) of the PGA, 1972, from other establishments mentioned under the same section. This finding prompted me to explore further the point you raised, as it seemed relevant to the case at hand, leading me to the conclusion stated above. Thank you for your thought-provoking question.
From India, Salem
From India, Salem
In the post, it is mentioned that the company has another unit in Baddi with 20+ employees, but at present place, it did not exceed 10. It is assumed that the company has escaped the Shop and Establishment Act for the branch, but how can they escape the ESIC and EPF which become applicable at 10 and 20 manpower strength? These two acts cover all the units under the same management or, to be precise, under the same PAN card automatically.
Now, coming to the working area, why are the employees denied PF/ESI benefits when they know that the manpower is more than the applicable limit? Was this not discussed in past years?
Either there are two separate units by constitution, or the company is using some franchise unit for manufacturing activity.
Now, to claim the benefits of gratuity, the employee has to make sure that his establishment is covered or coverable under the Shops and Establishment Act and has had more than 10 employees in the past year(s).
Now, coming to the working area, why are the employees denied PF/ESI benefits when they know that the manpower is more than the applicable limit? Was this not discussed in past years?
Either there are two separate units by constitution, or the company is using some franchise unit for manufacturing activity.
Now, to claim the benefits of gratuity, the employee has to make sure that his establishment is covered or coverable under the Shops and Establishment Act and has had more than 10 employees in the past year(s).
Hi Gildor,
This is what happens when the post is incomplete on details. It is possible that the OP has a salary that is above the ESIC limit and may be an exempt employee on PF records.
I noticed that while we are having a nice discussion, the original poster has not bothered to get into the post to clarify or give us additional information.
From India, Mumbai
This is what happens when the post is incomplete on details. It is possible that the OP has a salary that is above the ESIC limit and may be an exempt employee on PF records.
I noticed that while we are having a nice discussion, the original poster has not bothered to get into the post to clarify or give us additional information.
From India, Mumbai
When any company has 8 employees, then nobody is below 21000 or 15000 (respectively ceiling under ESIC/EPFO) is not possible in a broad concept, as there may be a maximum of up to 50% of senior posts but the balance would have a lower profile. So, if there is any common obligation between two units, it must be clubbed by the departments themselves.
I am working with many establishments that are PAN India-based and have multiple location establishments. They get covered under welfare schemes from day one with even a single employee on the register, with the primary establishment (Head office) sub-code.
Unless the complete details are available from the side of the query posting person, a reply with possible legal remedies is not worth it.
I am working with many establishments that are PAN India-based and have multiple location establishments. They get covered under welfare schemes from day one with even a single employee on the register, with the primary establishment (Head office) sub-code.
Unless the complete details are available from the side of the query posting person, a reply with possible legal remedies is not worth it.
Hi all, and thanks for your guidance,
I'm looking for other options for obtaining an experience/service letter that I received yesterday, which mentioned both the address of the Registered office (Chandigarh) and the Manufacturing Unit (Baddi). I think it will work.
I also want to know the maximum time limit to apply for gratuity.
From India, Chandigarh
I'm looking for other options for obtaining an experience/service letter that I received yesterday, which mentioned both the address of the Registered office (Chandigarh) and the Manufacturing Unit (Baddi). I think it will work.
I also want to know the maximum time limit to apply for gratuity.
From India, Chandigarh
@Pharmadesigner
Having an address on the letterhead does not confirm ownership.
Many companies with registered offices in India print their overseas address or liaison office address, but it cannot prove that the unit belongs to the Indian employer.
Also, on the websites of many companies, we find multiple addresses, almost in every state, but this also does not confirm that the individuals serving or working there fulfill the criteria of being an "employee" for the parent company.
Discuss the issue with management/HR of your establishment, clear your doubts through discussion first, and if the facts align, they will surely guide you on how to claim the benefit.
Having an address on the letterhead does not confirm ownership.
Many companies with registered offices in India print their overseas address or liaison office address, but it cannot prove that the unit belongs to the Indian employer.
Also, on the websites of many companies, we find multiple addresses, almost in every state, but this also does not confirm that the individuals serving or working there fulfill the criteria of being an "employee" for the parent company.
Discuss the issue with management/HR of your establishment, clear your doubts through discussion first, and if the facts align, they will surely guide you on how to claim the benefit.
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