2
As per Section 2 (e) of the Payment of Gratuity Act 1972 (extracted below), any person employed for wages and doing technical work is entitled for gratuity. So the consultant appears to be eligible.
(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, but does not include any such 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.
From India, Mumbai
(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, but does not include any such 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.
From India, Mumbai
Dear Colleague,
As rightly mentioned by our Colleague read the definition of " employee" which only excludes Apprentices. In addition to the above explanation, kindly have a thought on the below points:
1. Whether the Consultant working exclusively for your organization and attending to your work place on daily basis ( If consultant is working for multiple employers and visiting on and off on call basis and charging or raising invoice to you and to other employers, only for their days of visit only then the provision may not apply)
2. The other key word is " employed on wages". If you pay the Consultant for the days worked and every day the consultant exclusively working for your organization, then the payment may be construed as " wages" In such case the consultant is likely falling within the meaning of " employee"
3. Whether the consultant worked for Completed year of service and Continuous 5 years are other factors to be checked internally further before deciding the eligibility.
You need to analyze further deeper on these factors then only decide whether the consultant is " employee" and "employed on wages" Then proceed in the right way
All the Best God Bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
As rightly mentioned by our Colleague read the definition of " employee" which only excludes Apprentices. In addition to the above explanation, kindly have a thought on the below points:
1. Whether the Consultant working exclusively for your organization and attending to your work place on daily basis ( If consultant is working for multiple employers and visiting on and off on call basis and charging or raising invoice to you and to other employers, only for their days of visit only then the provision may not apply)
2. The other key word is " employed on wages". If you pay the Consultant for the days worked and every day the consultant exclusively working for your organization, then the payment may be construed as " wages" In such case the consultant is likely falling within the meaning of " employee"
3. Whether the consultant worked for Completed year of service and Continuous 5 years are other factors to be checked internally further before deciding the eligibility.
You need to analyze further deeper on these factors then only decide whether the consultant is " employee" and "employed on wages" Then proceed in the right way
All the Best God Bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
Dear Daisy Singh,
The term ' consultant' is now a days used in industries interchangeably as a designation of a regular employee and to denote an expert in any particular field whose services are engaged under a contract for service. Since the former is employed under a contract of service, he is an employee drawing wages/salary and is entitled to all the employment benefits including gratuity on the termination of his employment subject to the fulfilment of the statutory conditions stipulated whereas the latter is not an employee but only a contractor charging retainer fee and as such he is not entitled to any employment benefits including gratuity irrespective of the length of his contractual association with the establishment.
From India, Salem
The term ' consultant' is now a days used in industries interchangeably as a designation of a regular employee and to denote an expert in any particular field whose services are engaged under a contract for service. Since the former is employed under a contract of service, he is an employee drawing wages/salary and is entitled to all the employment benefits including gratuity on the termination of his employment subject to the fulfilment of the statutory conditions stipulated whereas the latter is not an employee but only a contractor charging retainer fee and as such he is not entitled to any employment benefits including gratuity irrespective of the length of his contractual association with the establishment.
From India, Salem
Let us first understand Consultant. He is a person who has no direct responsibility, he only advises. He is responsibe for his advice, if it comes wrong, then company is free to part with him. He has no other rules of the company to be followed, e.g. starting time, ending time, leave, HRA, Conveyance, etc etc. He gets a fixed amount per month. He has no working hours. He may be working for more than 5 years but that does not mean he is eligible for gratuity. One more thing is Consultant submits his bill at the end of month. Employee does not submit any bill. He is not covered under Provident Fund.
I have also seen a good (?) company who employs all and designates them as Consultant. So that they can avoid, bonus, gratuity, other payables to employees. They have working hours, leave etc. So long as the employee accepts it, no problem. MIYA BIBI RAAJI TO KYA KAREGA KAAZI.
Consultant is not an employee. He will not be eligible for any benefits like employees.
Vibhakar Ramtirthkar, Pune
From India, Pune
I have also seen a good (?) company who employs all and designates them as Consultant. So that they can avoid, bonus, gratuity, other payables to employees. They have working hours, leave etc. So long as the employee accepts it, no problem. MIYA BIBI RAAJI TO KYA KAREGA KAAZI.
Consultant is not an employee. He will not be eligible for any benefits like employees.
Vibhakar Ramtirthkar, Pune
From India, Pune
The reality is many organizations are using this route of engagement as consultant specially to retired employees and some other employees to avoid legal compliance ( PF, ESI, Gratuity etc.). To my opinion this is absolutely illegal arrangement. In any organization few person may be engaged as consultant but not the majority. There are cases where PF authority raised questions about such engagement and ultimately those organizations are required to comply under PF, ESI, Gratuity etc.
If the nature of job of any person is really in consultant nature with consolidated salary, the problem is less. But doing normal jobs even in shifts but designated as consultant to avoid compliance is absolutely illegal. Better to avoid this arrangement even if there is agreement between employees and employer.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
If the nature of job of any person is really in consultant nature with consolidated salary, the problem is less. But doing normal jobs even in shifts but designated as consultant to avoid compliance is absolutely illegal. Better to avoid this arrangement even if there is agreement between employees and employer.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
If your 'consultants' follow office timing, leave rules, report to somebody on a regular basis, and adhere to HR policies relating to dress code, time punching or marking of attendance, other office decorum etc, then he should be paid gratuity also subject to service conditions specified in the Act.
From India, Kannur
From India, Kannur
Dear Daisy Singh,
Your Q: Can consultant working regular for 5 years claim gratuity?
Ans: NO, because a consultant raises bill for his consultancy and that get disbursed either with GST or payment of GST other than the income tax.
The claim of gratuity for your consultant depending on the text of the agreement and mode of payment. One more thing you should know that people under fixed term contract job are also eligible for gratuity for the year of service rendered.
From India, Mumbai
Your Q: Can consultant working regular for 5 years claim gratuity?
Ans: NO, because a consultant raises bill for his consultancy and that get disbursed either with GST or payment of GST other than the income tax.
The claim of gratuity for your consultant depending on the text of the agreement and mode of payment. One more thing you should know that people under fixed term contract job are also eligible for gratuity for the year of service rendered.
From India, Mumbai
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Madras HC judg regarding gratuity is applicable if workmen is working 4 years 240 days..pdf