Yes He will be eligible for gratuity if has completed 05 year of continuous service.
Dear Madam / Sir,
Hi, I have a question connected to the topic.
A person over superannuation age (he is 60 Yrs of age) has joined our company.
Is the company to make provision for gratuity in his case?
Will he be entitled for gratuity in case he serves for 5 yrs?
Thanks & Regards
Major.Ashish Acharjee
20th August 2010 From India, Pune
From India, Pune
467Dear Madam / Sir,
Hi, I have a question connected to the topic.
A person over superannuation age (he is 60 Yrs of age) has joined our company.
Is the company to make provision for gratuity in his case?
Will he be entitled for gratuity in case he serves for 5 yrs?
Thanks & Regards
Major.Ashish Acharjee
20th August 2010 From India, Pune
From India, Pune
Hello Dear professionals
Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Coimbatore & Anr, 2012 LLR 1160
The Madras High Court, in its recent judgment in the case of Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Comimbator & Anr, was called upon to decide on an issue dealing with the payment of gratuity to an employee of the Mettur Thermal Power Station, Mettur, (Power Station) whose services were terminated in 2003. The employee concerned worked at the Power Station between 1988 and 1999, as a contract employee. In 1999, the employee was directly hired by the Power Station and he continued to be so employed till 2003. Upon termination of his services, the employee claimed gratuity payments for a period of sixteen years, between 1988 and 2003. The Power Station claimed that its responsibility to pay gratuity would lie only in respect of the period during which the employee was employed directly by the Power Station (i.e., 1999 – 2003) and not for the period when he was a contract employee. The Madras High Court held that gratuity, being a termination payment required to be paid under a law, would constitute ‘wages’ under the CLRA and in accordance with section 21(4) of the CLRA, the Power Station (being the principal employer for the period between 1988 and 1999) would be responsible for the payment of gratuity to the contract employee.
Analysis
The Madras High Court relied on a decision rendered by it earlier in the case of Madras Fertilizers Limited vs. Controlling Authority under Payment of Gratuity Act and Others[1] and held that 'gratuity' payable under the Payment of Gratuity Act, 1972, were wages for the purposes of the CLRA. Consequently, by virtue of section 21 (4) of the CLRA, the onus of payment of gratuity would lie on the principal employer in the event of a contractor’s failure to pay.
While interpreting the definition of wages, the court held that, "the very language of Sub-clause (6) suggests that any gratuity which is not covered by Clause (d) is excluded from the term 'wages'. This would presuppose that Clause (d) covers some gratuity. Which that gratuity would be is the moot question to be answered. The answer is to be found in the plain language of Clause (d) which opens with the words 'any sum which by reason of the termination of employment of the person employed is payable under any law'". The Court held that 'gratuity' payable under the Payment of Gratuity Act, 1972 is a sum which by reason of the termination of employment of the person employed is payable under a law and accordingly would fall within clause (d) of the definition of ‘wages’ (quoted above).
Conclusion
This decision reiterates that a contract employee, working for a principal employer at the time of termination of his services by a contractor, may have a strong claim for the payment of gratuity directly from the principal employer in the event of a contractor’s failure. Therefore, it is advisable for all principal employers engaging contract labour through man power agencies and other contractors, to not only focus on ensuring contractor compliance towards routine payment of wages and benefits, but also towards terminal payments (such as gratuity) when a contract employee is exited during the period of his or her engagement
From India, Hyderabad
Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Coimbatore & Anr, 2012 LLR 1160
The Madras High Court, in its recent judgment in the case of Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Comimbator & Anr, was called upon to decide on an issue dealing with the payment of gratuity to an employee of the Mettur Thermal Power Station, Mettur, (Power Station) whose services were terminated in 2003. The employee concerned worked at the Power Station between 1988 and 1999, as a contract employee. In 1999, the employee was directly hired by the Power Station and he continued to be so employed till 2003. Upon termination of his services, the employee claimed gratuity payments for a period of sixteen years, between 1988 and 2003. The Power Station claimed that its responsibility to pay gratuity would lie only in respect of the period during which the employee was employed directly by the Power Station (i.e., 1999 – 2003) and not for the period when he was a contract employee. The Madras High Court held that gratuity, being a termination payment required to be paid under a law, would constitute ‘wages’ under the CLRA and in accordance with section 21(4) of the CLRA, the Power Station (being the principal employer for the period between 1988 and 1999) would be responsible for the payment of gratuity to the contract employee.
Analysis
The Madras High Court relied on a decision rendered by it earlier in the case of Madras Fertilizers Limited vs. Controlling Authority under Payment of Gratuity Act and Others[1] and held that 'gratuity' payable under the Payment of Gratuity Act, 1972, were wages for the purposes of the CLRA. Consequently, by virtue of section 21 (4) of the CLRA, the onus of payment of gratuity would lie on the principal employer in the event of a contractor’s failure to pay.
While interpreting the definition of wages, the court held that, "the very language of Sub-clause (6) suggests that any gratuity which is not covered by Clause (d) is excluded from the term 'wages'. This would presuppose that Clause (d) covers some gratuity. Which that gratuity would be is the moot question to be answered. The answer is to be found in the plain language of Clause (d) which opens with the words 'any sum which by reason of the termination of employment of the person employed is payable under any law'". The Court held that 'gratuity' payable under the Payment of Gratuity Act, 1972 is a sum which by reason of the termination of employment of the person employed is payable under a law and accordingly would fall within clause (d) of the definition of ‘wages’ (quoted above).
Conclusion
This decision reiterates that a contract employee, working for a principal employer at the time of termination of his services by a contractor, may have a strong claim for the payment of gratuity directly from the principal employer in the event of a contractor’s failure. Therefore, it is advisable for all principal employers engaging contract labour through man power agencies and other contractors, to not only focus on ensuring contractor compliance towards routine payment of wages and benefits, but also towards terminal payments (such as gratuity) when a contract employee is exited during the period of his or her engagement
From India, Hyderabad
The Gratuity is payable to the employee either on completion of "Complete Five Years or 4 Yrs and Eight Month". Now, the question arises, whether the Contractual employee is eligible for Gratuity or not. For 1- 4 Year absolutely not but sooner the Employee completes the continuous 5 years withinb the organisation even, if he is on contract, the employee shall get eligible for the Gratuity.
From India, New Delhi
From India, New Delhi
An employee on a contractual basis is eligible for gratuity as per the PG Act 1972 subject to the other conditions.
From India, Mumbai
From India, Mumbai
Basically companies with irresponsible and unqualified legal advisors or with a deliberate intent to hoodwink the law try to deploy various tactics and try to squeeze-in terms or nomenclatures in the employment agreement. But the Payment Of Gratuity Act encompasses any person working for an "employer" under its ambit and the social security payable cannot be avoided by the employer by calling the person as contractor or intern or apprentice if they have extracted full time work from them. The only exception so far considered by the courts are the platform and gig workers who are truly independent and work as partners using their own resources for a company. So many lawyers I am amazed are giving irresponsible answers clearly depicting their absolute incompetence in understanding law.
From India
From India
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