Hi,
Employee A has worked in company ABC for 7 yrs. In his 7 years duration, he was deputed on contract basis by his parent company to work with Principal Employer X - 2 yrs, Y - 3 Yrs and Z - 2 yrs.
Now as company ABC ( employer of A) is required to pay gratuity to A, Can company ABC claim the same from Principal employers X, Y and Z for the period A has worked with them on pro rate basis ??
From India, Pune
1Employee A has worked in company ABC for 7 yrs. In his 7 years duration, he was deputed on contract basis by his parent company to work with Principal Employer X - 2 yrs, Y - 3 Yrs and Z - 2 yrs.
Now as company ABC ( employer of A) is required to pay gratuity to A, Can company ABC claim the same from Principal employers X, Y and Z for the period A has worked with them on pro rate basis ??
From India, Pune
Dear Chandrakanth,
You may refer to the previous threads on the subject particularly one titled " 35 interesting Questions related to Contract Labor ".
Principal Employer's liability to pay gratuity to contract labor is a matter over which no consensus judicial opinion so far. The view of the Kerala High Court is that the PE has no legal obligation to pay gratuity to his contract labor because neither the CLRA Act,1970 nor the PG Act,1972 provides for payment of gratuity to CL by the PE [ Cominco Binani Zinc Ltd., v Pappachan ( 1989 LLR 123 ) while the Madras High Court has held in Madras Fertilizers Ltd., v C.A under the P.G Act [2003 LLR 244 ] that gratuity should be paid by the PE first and got reimbursed from the concerned contractor later as per the vicarious liability imposed on him vide sec.21(4) of the CLRA Act,1970.
Coming to the situation described in your query, my view is that the time elapsed as well as the respective length of service under each PE falling below the minimum qualifying service would forbid any later claim for gratuity from them.
From India, Salem
You may refer to the previous threads on the subject particularly one titled " 35 interesting Questions related to Contract Labor ".
Principal Employer's liability to pay gratuity to contract labor is a matter over which no consensus judicial opinion so far. The view of the Kerala High Court is that the PE has no legal obligation to pay gratuity to his contract labor because neither the CLRA Act,1970 nor the PG Act,1972 provides for payment of gratuity to CL by the PE [ Cominco Binani Zinc Ltd., v Pappachan ( 1989 LLR 123 ) while the Madras High Court has held in Madras Fertilizers Ltd., v C.A under the P.G Act [2003 LLR 244 ] that gratuity should be paid by the PE first and got reimbursed from the concerned contractor later as per the vicarious liability imposed on him vide sec.21(4) of the CLRA Act,1970.
Coming to the situation described in your query, my view is that the time elapsed as well as the respective length of service under each PE falling below the minimum qualifying service would forbid any later claim for gratuity from them.
From India, Salem
Since A has been an employee of ABC, a company which takes work on contract, and has sent him to work with different principal employers, how can he claim it from the latter. Here there is a specific master servant relationship between A and ABC. It is not that he was deployed in Principal employer X alone for 7 years. then the scenario would have been different. Just because you deploy your employees to work for some others (ie, Principal Employers) how can you be out of coverage of Payment of Gratuity Act? It is the sole responsibility of the employer (ABC) to pay gratuity to his employees while they leave service after rendering the qualifying service. You cannot charge it to your clients.
From India, Kannur
From India, Kannur
ABC is liable for garatuity.Depending on its contractual terms with PE if any,it get it reimbursed from PE.But primarily ABC is liable as A is employed by ABC.
From India, Thiruvananthapuram
From India, Thiruvananthapuram
Since none of he Principal Employers has not engaged A for five years, the contractor cannot claim it from any of these Principal employer. If it is to claim from Principal Employer who engages a contract worker for, say three years, then there would be no end it because every worker should have a service with any other principal employer. It is okay if the same worker is engaged for five years by a principal employer.
From India, Kannur
From India, Kannur
The Employer of the employee is liable to pay the gratuity. Here M/s ABC is the employer as well as the paymaster of the employee.
It is out of context where the employee worked till his last day of service. The person rendered his service to M/s X,Y & Z as an employee of M/s ABC. Further, gratuity is the liability of imiidiate employer but no the principal employer.
The cost of gratuity can be claimed by M/s ABC from M/s X,Y & Z, if there had been any undrstanding to compensate or to reimburse the cost put providing the service. The Principal employers M/s X, Y and Z are no way associate with payment of gratuity for the employee of M/s ABC.
From India, Mumbai
It is out of context where the employee worked till his last day of service. The person rendered his service to M/s X,Y & Z as an employee of M/s ABC. Further, gratuity is the liability of imiidiate employer but no the principal employer.
The cost of gratuity can be claimed by M/s ABC from M/s X,Y & Z, if there had been any undrstanding to compensate or to reimburse the cost put providing the service. The Principal employers M/s X, Y and Z are no way associate with payment of gratuity for the employee of M/s ABC.
From India, Mumbai
Gratuity, payable under the Payment of Gratuity Act, 1972, is a gratuitous payment required to be made by an employer to his employee at the time of termination of services of the employee or upon such employee’s death.
Section 21 (4) of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA), mandates that a principal employer is responsible for the payment of ‘wages’ to a contract employee in the event of a contractor’s failure to pay within the stipulated timelines or in the event of a contractor making a short payment. The principal employer then has the ability to recover the amount paid as 'wages', from the contractor. Section 2(h) of the CLRA defines the term 'wages' as all remuneration (whether by salary, allowances or otherwise) expressed in terms of money or capable of being so expressed, which would if the terms of employment, expressed or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes, among others, "(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment...". However, it excludes "(6) any gratuity payable on the termination of employees in cases other than those specified in (d)." The judgment below has now held that gratuity payable under the Payment of Gratuity Act, 1972 falls within this definition of 'wages'.
Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Coimbatore & Anr, 2012 LLR 1160
From India, Bengaluru
Section 21 (4) of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA), mandates that a principal employer is responsible for the payment of ‘wages’ to a contract employee in the event of a contractor’s failure to pay within the stipulated timelines or in the event of a contractor making a short payment. The principal employer then has the ability to recover the amount paid as 'wages', from the contractor. Section 2(h) of the CLRA defines the term 'wages' as all remuneration (whether by salary, allowances or otherwise) expressed in terms of money or capable of being so expressed, which would if the terms of employment, expressed or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes, among others, "(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment...". However, it excludes "(6) any gratuity payable on the termination of employees in cases other than those specified in (d)." The judgment below has now held that gratuity payable under the Payment of Gratuity Act, 1972 falls within this definition of 'wages'.
Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Coimbatore & Anr, 2012 LLR 1160
From India, Bengaluru
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc