Principal Employer is not liable to make Payment of Gratuity to contract worker
From India, Kolkata
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11From India, Kolkata
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Sir, I want to know what is the responsibility of stake holder manager for a establishment. Kindly explain me
From India, Chandigarh
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From India, Chandigarh
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Contract workers are hired by the contractor, who is the employer for contract workers. Accordingly, contract workers have to work with their employer to meet the eligibility criteria of 5 years as per the Gratuity Act. In the given case, the contractor has changed. Hence, none of the contractors have an obligation to pay the gratuity since they have not completed the minimum eligibility period required under the act.
It may be noted that the employer is liable for the payment of gratuity, and the principal employer has the obligation to ensure payment for the contract workers working on his premises, subject to meeting the eligibility criteria. Some organizations consider the expense towards gratuity payment when calculating the cost of the contract.
From India, Bangalore
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It may be noted that the employer is liable for the payment of gratuity, and the principal employer has the obligation to ensure payment for the contract workers working on his premises, subject to meeting the eligibility criteria. Some organizations consider the expense towards gratuity payment when calculating the cost of the contract.
From India, Bangalore
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If the person has completed 5 years of service in your organization, it is mandatory to give gratuity to the person irrespective of the 1-month gap in the contract.
Hope you find this information useful.
If you have any queries regarding any other labor laws, call me at 8356832404.
From India, Thane
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Hope you find this information useful.
If you have any queries regarding any other labor laws, call me at 8356832404.
From India, Thane
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(Fact Checked)-The user reply is correct. As per the Payment of Gratuity Act, if an employee completes 5 years of continuous service, they are eligible for gratuity regardless of intermittent breaks like a 1-month gap. Thank you for sharing your knowledge. (1 Acknowledge point)
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An employee engaged on contractual terms for one year and thereafter engaged for yet another term of one year after a gap of one month, and again and again being engaged in a similar fashion for the next 3 years and thus, totally the employee has put in five years. The question is whether he is eligible for gratuity on expiry of the 5th year of contractual engagement.
The answer is YES.
Reasons:
The employer finds the employee a value-added resource and feels his continuation in service, regardless of the nature of the contract, is useful to the organization. By giving a break of 30 days before engaging on the same contractual basis for one year again and again, it is glaringly understood and common sense that the employee should forgo statutory benefits like gratuity. In this process, the employer should not lose sight of the fact that continuous service is rendered by the employee as per the PG Act, notwithstanding the break in service of 30 days, which is deemed to be service being computed/continued for the purpose of gratuity. Employers should take these points into consideration rather than resorting to shortcuts and circumventing the law.
Panchsen
P. Senthilkumar
9884009193
From India, Chennai
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The answer is YES.
Reasons:
The employer finds the employee a value-added resource and feels his continuation in service, regardless of the nature of the contract, is useful to the organization. By giving a break of 30 days before engaging on the same contractual basis for one year again and again, it is glaringly understood and common sense that the employee should forgo statutory benefits like gratuity. In this process, the employer should not lose sight of the fact that continuous service is rendered by the employee as per the PG Act, notwithstanding the break in service of 30 days, which is deemed to be service being computed/continued for the purpose of gratuity. Employers should take these points into consideration rather than resorting to shortcuts and circumventing the law.
Panchsen
P. Senthilkumar
9884009193
From India, Chennai
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Dear Mr. Madhu K,
I seek your esteemed guidance.
In a CPSE that is sick and is under closure, all employees are hired on a contract for one year, and in a few cases, for a 3-year fixed-period contract. The initial employment offer letter clearly states that gratuity will not be paid at the end of the contractual term. The contractual employment of these employees has been extended on a yearly basis, and many employees have completed more than 5 years of service without a break, even though the yearly renewal letter states 'on the same terms and conditions.'
Can the payment of gratuity be denied to the employees because the initial offer letter stated that 'you shall not be paid gratuity at the end of your term and the contract extended on 'same terms and conditions'? Furthermore, if a break in service of 5 or 7 working days is given before renewal on the contract each year, will this be legal and construed as a break in continuous service? Can gratuity be denied in such cases?
Thirdly, if a person has worked as a regular employee for 4 years and 5 months, and then with a one-day break (which happens to be a Sunday), is reappointed as a contractual employee for one more year, making the total period 5 years and 5 months with the same employer, can gratuity be claimed?
Thank you.
From India, Delhi
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I seek your esteemed guidance.
In a CPSE that is sick and is under closure, all employees are hired on a contract for one year, and in a few cases, for a 3-year fixed-period contract. The initial employment offer letter clearly states that gratuity will not be paid at the end of the contractual term. The contractual employment of these employees has been extended on a yearly basis, and many employees have completed more than 5 years of service without a break, even though the yearly renewal letter states 'on the same terms and conditions.'
Can the payment of gratuity be denied to the employees because the initial offer letter stated that 'you shall not be paid gratuity at the end of your term and the contract extended on 'same terms and conditions'? Furthermore, if a break in service of 5 or 7 working days is given before renewal on the contract each year, will this be legal and construed as a break in continuous service? Can gratuity be denied in such cases?
Thirdly, if a person has worked as a regular employee for 4 years and 5 months, and then with a one-day break (which happens to be a Sunday), is reappointed as a contractual employee for one more year, making the total period 5 years and 5 months with the same employer, can gratuity be claimed?
Thank you.
From India, Delhi
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First of all, you cannot have any negative agreement; any agreement which prohibits an employee from obtaining a legal right is invalid. Therefore, the clause stating that the first three years of service will not be counted for gratuity will not be maintainable. As such, if he continues for five years, he will be eligible for gratuity.
Secondly, a break of seven days in a twelve-month period will not render the employee ineligible for gratuity. By allowing a 7-day break after each contract term, the employee would naturally have 240 days of service in each period. An employee would qualify for gratuity if they have at least 240 paid days in each twelve-month service period.
Four years and five months of service would make the employee ineligible for gratuity, but if the second spell of contractual employment contributes to 240 days in the last twelve months, in combination with regular employment, he will receive gratuity. This means that changing the employment status by creating an artificial one or two-day break will not affect the employee's eligibility for gratuity.
From India, Kannur
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Secondly, a break of seven days in a twelve-month period will not render the employee ineligible for gratuity. By allowing a 7-day break after each contract term, the employee would naturally have 240 days of service in each period. An employee would qualify for gratuity if they have at least 240 paid days in each twelve-month service period.
Four years and five months of service would make the employee ineligible for gratuity, but if the second spell of contractual employment contributes to 240 days in the last twelve months, in combination with regular employment, he will receive gratuity. This means that changing the employment status by creating an artificial one or two-day break will not affect the employee's eligibility for gratuity.
From India, Kannur
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(Fact Checked)-The user's reply contains accurate information regarding gratuity eligibility despite breaks in service. There is no provision for excluding the first three years for gratuity calculation. The 240-day rule for gratuity eligibility is correctly explained. (1 Acknowledge point)
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Sir,
No issue. All contract employees who are continued for the consecutive year are perfectly eligible for Gratuity. Even PF ESI remittances have a gap of one month or two months, no issue. Dues of EPF ESI can be offered by the individual worker with the worker's contribution and matching Employer's contribution without the intervention of management.
If the contractor troubles those workers for renewing EPF ESI INDIVIDUAL ACCOUNTS, THEY CAN TAKE LEGAL PROTECTION FROM LABOUR DEPT. AND ESI EPF DEPTS TO CONVINCE THE MANAGEMENT CONTRACTOR AMICABLY.
FOR PAYMENT OF GRATUITY IF THE CONTRACTOR DENIES OR FAILS TO PAY, THEN THE PRINCIPAL EMPLOYER IS LIABLE TO PAY GRATUITY DUES OF EACH WORKER. THE P.E. CAN RECOVER THOSE PAID GRATUITY AMOUNTS FROM THE PAYING CONTRACT BILLS IN THE FUTURE.
From India, Nellore
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No issue. All contract employees who are continued for the consecutive year are perfectly eligible for Gratuity. Even PF ESI remittances have a gap of one month or two months, no issue. Dues of EPF ESI can be offered by the individual worker with the worker's contribution and matching Employer's contribution without the intervention of management.
If the contractor troubles those workers for renewing EPF ESI INDIVIDUAL ACCOUNTS, THEY CAN TAKE LEGAL PROTECTION FROM LABOUR DEPT. AND ESI EPF DEPTS TO CONVINCE THE MANAGEMENT CONTRACTOR AMICABLY.
FOR PAYMENT OF GRATUITY IF THE CONTRACTOR DENIES OR FAILS TO PAY, THEN THE PRINCIPAL EMPLOYER IS LIABLE TO PAY GRATUITY DUES OF EACH WORKER. THE P.E. CAN RECOVER THOSE PAID GRATUITY AMOUNTS FROM THE PAYING CONTRACT BILLS IN THE FUTURE.
From India, Nellore
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I wonder why many HR professionals are asking on this platform how to escape payments under eligible labor laws and how to make employees ineligible for gratuity payments. Many HR professionals are requesting to favor managements by claiming that they have saved some amounts by following these practices.
This is very clear... instance.
First, I am stating that all contract laborers are eligible for ESI and EPF. It is a statutory duty of the contractor as well as a possible Permanent Establishment (P.E.).
Secondly, no contract laborer should leave their job for a month or so willingly unless there is pressure from the contractor and management. You do not want any risks from the workers' side. So, considering ways to escape gratuity payments to innocent workers, regardless of their designation, may not be ethical. The intention is evidently known to all.
Let's focus on following the laws of the land under labor Acts.
From India, Nellore
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This is very clear... instance.
First, I am stating that all contract laborers are eligible for ESI and EPF. It is a statutory duty of the contractor as well as a possible Permanent Establishment (P.E.).
Secondly, no contract laborer should leave their job for a month or so willingly unless there is pressure from the contractor and management. You do not want any risks from the workers' side. So, considering ways to escape gratuity payments to innocent workers, regardless of their designation, may not be ethical. The intention is evidently known to all.
Let's focus on following the laws of the land under labor Acts.
From India, Nellore
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(Fact Checked)-[response] (1 Acknowledge point)
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Here, views and discussions are based on Acts word by word, like a moving encyclopedia. My views are based on ground reality and what is happening in practice. Therefore, my words may not be suited or sugar-coated for many. In my view, every person, from worker to employer, should respect the relevant labor laws applicable. Unfair labor practices lead to dissatisfaction among the working community. That's why newly launched mega factories often close within two years of operation. I suggest that we all encourage good behavior in following labor laws among management and workers.
From India, Nellore
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From India, Nellore
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(Fact Checked)-The term "stakeholder manager" is not specific. Stakeholders can include employees, customers, suppliers, etc. The responsibilities vary based on stakeholder type. (1 Acknowledge point)