Dear Seniors
Want to get clarification on Gratuity.
1. Is gratuity applicable for an employee who worked within 2 or 3 group Company? One of my Sr. Employee who worked 2.5 yrs in x , 3 yrs in y & 1.5 yrs in Z companies but x,y &z are group companies.
2. If gratuity is applicable, which Company need to pay the gratuity?
Regards
John
From India, Madras
58Want to get clarification on Gratuity.
1. Is gratuity applicable for an employee who worked within 2 or 3 group Company? One of my Sr. Employee who worked 2.5 yrs in x , 3 yrs in y & 1.5 yrs in Z companies but x,y &z are group companies.
2. If gratuity is applicable, which Company need to pay the gratuity?
Regards
John
From India, Madras
there is no applicable for group companies. for each company you need to maintain gratuity on own and for every company you need to complete a minimum period of five years for eligibility of gratuity.
From India, New Delhi
From India, New Delhi
To my knowledge, I don't think that there is any legal existence for a separate company form of organization called " Group Company". Eventhough more than one company are owned by the same group of individuals or shareholders each and every such company is a separate legal entity for all practical purposes unless and otherwise they have a common balance sheet. Of course in colloquial parlence they are called as group companies because of the joint-ownership of the same group of individuals normally originating from the same business family. Therefore, as rightly said by Jagat Kumar, an employee should have completed a continuous service of not less than 5 years in a particular company prior to the termination of his employment in that company due to any reason other than death or disability due to accident so as to stake his claim for gratuity. This is the normal legal position. However, if there is a common agreement among such companies for inter-company transfer of the services of their employees with continuity of service, the final transferee company would be liable to pay the gratuity of the out-going employee on the entire cumulative service though his actual length of service in that one is less than 5 years.
From India, Salem
From India, Salem
Dear John,
Large industrial houses have many separate companies which are legal entities. On need basis management transfers employees from one company to the other. In many cases the employee is required to resign from the Ist company and gets a fresh appointment letter while joining the next company within the same Group. Every time the employee changes the payroll of Group Companies, his full and final settlement is done from the company from where he exits. In this regard two types of practices are there on ground:
1. Gratuity is not transferred from one company to the next. If the employee has completed 5 years of service on the rolls of one company. He gets gratuity along with his F&F. If his service is less than 5 years he is not entitled for any gratuity.
2. Some Groups follow the practice of carrying forward Gratuity and Leave accumulation. In this case the appointment letter issued by the next company in the Group has a sentence like this - "for the purpose of gratuity and any other long term terminal benefits, your service will be treated as continuous from ................ (Date of joining the first company)"
In the case mentioned by you, if this kind of a clause is there in appointment letters issued to him by ubsequent companies, then the concerned employee is eligible for gratuity. If such a clause is not there then he is not eligible for gratuity.
Secondly gratuity is to be paid to the employee by his last employer company in the Group. For accounting purposes every time the employee changes the payroll, pro-rata gratuity amount is transferred by the relieving company to the appointing company.
I hope this answers your query.
Best Wishes,
Indu Wadhwa
Aspiring People
9811513715
From India, New Delhi
Large industrial houses have many separate companies which are legal entities. On need basis management transfers employees from one company to the other. In many cases the employee is required to resign from the Ist company and gets a fresh appointment letter while joining the next company within the same Group. Every time the employee changes the payroll of Group Companies, his full and final settlement is done from the company from where he exits. In this regard two types of practices are there on ground:
1. Gratuity is not transferred from one company to the next. If the employee has completed 5 years of service on the rolls of one company. He gets gratuity along with his F&F. If his service is less than 5 years he is not entitled for any gratuity.
2. Some Groups follow the practice of carrying forward Gratuity and Leave accumulation. In this case the appointment letter issued by the next company in the Group has a sentence like this - "for the purpose of gratuity and any other long term terminal benefits, your service will be treated as continuous from ................ (Date of joining the first company)"
In the case mentioned by you, if this kind of a clause is there in appointment letters issued to him by ubsequent companies, then the concerned employee is eligible for gratuity. If such a clause is not there then he is not eligible for gratuity.
Secondly gratuity is to be paid to the employee by his last employer company in the Group. For accounting purposes every time the employee changes the payroll, pro-rata gratuity amount is transferred by the relieving company to the appointing company.
I hope this answers your query.
Best Wishes,
Indu Wadhwa
Aspiring People
9811513715
From India, New Delhi
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Hello Seniors.doc
FORM-F-NOMINATI ON OF GRATUITY.pdf