We are a group companies under which we have 5 companies. The directors are common in all 5 companies and registered office address is also same. If we transfer one employee from Company A , where he worked for 3.5 years to another company B where he worked for 4.4 years, will he be eligible for Gratuity. We have common directors.
Please advise
From India, Delhi
1Please advise
From India, Delhi
Yes, his date of joining in the first company will be treated as date of joining for all purposes including continuous service.
From India, Kannur
From India, Kannur
This is a question of both law and facts and would depend on the working arrangement between the two establishments. As per the Companies Act 2013, a company is different from its shareholders. So every company is separate and distinct, this is the position of law. Now unless the facts of the matter show an integrality in the functioning the claim is not likely to be upheld. It all would depend on how the case is put up. In the PGA 1972 there is no provision for clubbing of the units.
From India, Mumbai
From India, Mumbai
i agree with Madhu T.K. At the time of transferring the employee from organization A to B it is essential to mention as continuous service. If it is not mentioned as continuous service and if it is treated differently for not paying gratuity by finding loop holes of the law, then it is exploitation of the concerned employee and wrong practice following by the organization.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
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From India, New Delhi
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
The transfer was done after doing full and final settlement in the first company . Is gratuity still applicable
From India, Delhi
From India, Delhi
This is a situation which requires intervention of law enforcing officers. The objective behind such transfer (it is not transfer when there is a full and final settlement at company A) should be viewed carefully because prima facie evidences show that it was a deliberate act to avoid payment of gratuity. When all the five establishments belong to the same set of employers, and when there exists financial integrality, transfer from one establishment to another as part of business exigencies is very common. But in such scenario there will not be any settlement done but only handing over of the charges would be enough. If the employee transferred from one unit is given final settlement and he is issued a fresh appointment letter to join another establishment of the same management, it should be viewed as an act to deny gratuity.
From India, Kannur
From India, Kannur
What Mr. Madhu T K has been mentioned, I would like to add that the strategy of the organization along with HR team is to find out loop holes in act to deprive the employee by not paying Gratuity. The basic purpose of the PG Act is to pay gratuity if the employee continues its job to one employer.
F & F with Organization A and then reappointment to organization B will appear in the eyes of law as exploitation. My personal feeling if the matter is placed before the controlling authority of PG Act, it will be in favor of the employee. I have no knowledge about any case law in this matter.
I will only request the organization and HR team members to think in the direction positively and not to exploit any employee.
S K Bandyopadhyay ( Howrah, WB)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
F & F with Organization A and then reappointment to organization B will appear in the eyes of law as exploitation. My personal feeling if the matter is placed before the controlling authority of PG Act, it will be in favor of the employee. I have no knowledge about any case law in this matter.
I will only request the organization and HR team members to think in the direction positively and not to exploit any employee.
S K Bandyopadhyay ( Howrah, WB)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
I wish to add a little here. The query stating that it is a transfer from A to B. If it is a transfer then the employee is eligible as there is no break in service.
If as one of colleague pointed out, if it is movement from A to B after full and final settlement then employee is not eligible for continuity of service. However, the word of transfer does not arise here.
However, in the eyes of law and on complaint the authorities may see in a different angle including mens rea and if the purpose is to avoid gratuity, the actions will follow.
From India, Hyderabad
If as one of colleague pointed out, if it is movement from A to B after full and final settlement then employee is not eligible for continuity of service. However, the word of transfer does not arise here.
However, in the eyes of law and on complaint the authorities may see in a different angle including mens rea and if the purpose is to avoid gratuity, the actions will follow.
From India, Hyderabad
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