Worked on a yearly contract, signing an agreement of service for a period of one year each time. I have signed 6 agreements so far without any breaks, resulting in continuous work for 6 years. Can I be considered as an "Employee" for Gratuity purposes? Will signing the contract annually deprive me of Gratuity? The HR department is denying me Gratuity, claiming that since I have signed the contract every year, I am not eligible for Gratuity.
Please advise.
From India, Mumbai
3Please advise.
From India, Mumbai
Dear Deepa,
Yes, certainly, you are eligible for gratuity since you have completed more than 5 years of continuous service under the same employer despite the fixed-term contract between the same employer and yourself for every year. Unfortunately, many of the modern HR fraternity form such erroneous views regarding statutory claims only by taking cues from employers with exploitative tendencies and racking their brains to formulate such contracts to circumvent the beneficial provisions of some labor law or another. It would have been better if you could have provided extracts of the contracts. If the fixed-term contract of service was only for a limited period of one year and strictly not renewable thereafter, how was it renewed continuously for successive six years without a break of even a single day? Continuity of service or continuous service is a fact to be determined based on the subsisting substantial employment relationship between the employer and employee without any break over any particular stretch of the period from the beginning to the end. If your HR's contention is accepted, every employer can enter into an annual fixed-term contract of service with every employee he employs and claim that the contract will prevail over the provisions of the Payment of Gratuity Act, 1972, and disentitle the claim for gratuity since he/she signed the contract every year.
Send a notice to the employer for gratuity if you are not in service after the expiry of the last contract, and if it is of no use, file a claim before the Controlling Authority under the Act for the area.
From India, Salem
Yes, certainly, you are eligible for gratuity since you have completed more than 5 years of continuous service under the same employer despite the fixed-term contract between the same employer and yourself for every year. Unfortunately, many of the modern HR fraternity form such erroneous views regarding statutory claims only by taking cues from employers with exploitative tendencies and racking their brains to formulate such contracts to circumvent the beneficial provisions of some labor law or another. It would have been better if you could have provided extracts of the contracts. If the fixed-term contract of service was only for a limited period of one year and strictly not renewable thereafter, how was it renewed continuously for successive six years without a break of even a single day? Continuity of service or continuous service is a fact to be determined based on the subsisting substantial employment relationship between the employer and employee without any break over any particular stretch of the period from the beginning to the end. If your HR's contention is accepted, every employer can enter into an annual fixed-term contract of service with every employee he employs and claim that the contract will prevail over the provisions of the Payment of Gratuity Act, 1972, and disentitle the claim for gratuity since he/she signed the contract every year.
Send a notice to the employer for gratuity if you are not in service after the expiry of the last contract, and if it is of no use, file a claim before the Controlling Authority under the Act for the area.
From India, Salem
Dear Mr. Umakanthan.M sir,
Thank you very much for your insight on the subject. Every contract signed was for a period of one year (i.e., from 12/07/2010 to 11/07/2011, 12/07/2011 to 11/07/2012, 12/07/2012 to 11/07/2013, 12/07/2013 to 11/07/2014, 12/07/2014 to 11/07/2015, and the final agreement was from 12/07/2015 to 11/07/2016). Every year, a new agreement was signed with a change in remuneration/honorarium only, keeping all the terms and conditions the same. There was no mention of payment of gratuity in any of the agreements. The agreement can be terminated by giving one month's notice by either party. It also states that "The said contract stands terminated on its expiry unless renewed."
After the final agreement, the HR has informed me that hereafter no new agreement will be made, and my services are not required. I was following the attendance rules and regulations of the company, receiving 28 days of leave, being a member of the employees' group insurance scheme, along with the agreed monthly remuneration. I did not sign any invoice for the services rendered. On my full and final settlement receipt for the last 11 days period (from 01/07/2016 to 11/07/2016), the Date of Joining is stated as 12/07/2010, and the date of Leaving as 11/07/2016. If you permit me, I will call you, and if I get your email ID over the phone, I can email you my contract copy for your further advice.
Thank you again, and my sincere apologies for disturbing you.
Regards,
Deepak Nayak
9867681715, 8291097149
From India, Mumbai
Thank you very much for your insight on the subject. Every contract signed was for a period of one year (i.e., from 12/07/2010 to 11/07/2011, 12/07/2011 to 11/07/2012, 12/07/2012 to 11/07/2013, 12/07/2013 to 11/07/2014, 12/07/2014 to 11/07/2015, and the final agreement was from 12/07/2015 to 11/07/2016). Every year, a new agreement was signed with a change in remuneration/honorarium only, keeping all the terms and conditions the same. There was no mention of payment of gratuity in any of the agreements. The agreement can be terminated by giving one month's notice by either party. It also states that "The said contract stands terminated on its expiry unless renewed."
After the final agreement, the HR has informed me that hereafter no new agreement will be made, and my services are not required. I was following the attendance rules and regulations of the company, receiving 28 days of leave, being a member of the employees' group insurance scheme, along with the agreed monthly remuneration. I did not sign any invoice for the services rendered. On my full and final settlement receipt for the last 11 days period (from 01/07/2016 to 11/07/2016), the Date of Joining is stated as 12/07/2010, and the date of Leaving as 11/07/2016. If you permit me, I will call you, and if I get your email ID over the phone, I can email you my contract copy for your further advice.
Thank you again, and my sincere apologies for disturbing you.
Regards,
Deepak Nayak
9867681715, 8291097149
From India, Mumbai
Dear Mr. Umakanthan.M sir,
In one of the terms of the contract, it is stated as: "This agreement takes effect in substitution for any previous agreement or agreement whether written, oral, or implied between the company and Deputy General Manager - IT relating to the services of Deputy General Manager - IT, and any such agreement or arrangement shall be deemed to have been terminated by mutual consent as from the date hereof."
Does this agreed-upon term have any implications on the eligibility criteria? Please advise.
Thanks and regards
From India, Mumbai
In one of the terms of the contract, it is stated as: "This agreement takes effect in substitution for any previous agreement or agreement whether written, oral, or implied between the company and Deputy General Manager - IT relating to the services of Deputy General Manager - IT, and any such agreement or arrangement shall be deemed to have been terminated by mutual consent as from the date hereof."
Does this agreed-upon term have any implications on the eligibility criteria? Please advise.
Thanks and regards
From India, Mumbai
Mr. Deepak,
I fully agree with the comments of Shri Umakanthan ji, which are absolutely correct in the light of your detailed note. You are eligible for the payment of Gratuity for which you have to approach your employer and the Controlling Authority under the Payment of Gratuity Act, 1972 by filing your application in Form "I".
P K Sharma
From India, Delhi
I fully agree with the comments of Shri Umakanthan ji, which are absolutely correct in the light of your detailed note. You are eligible for the payment of Gratuity for which you have to approach your employer and the Controlling Authority under the Payment of Gratuity Act, 1972 by filing your application in Form "I".
P K Sharma
From India, Delhi
CiteHR.AI
(Fact Checked)-The user reply is correct. Thank you for providing accurate advice on gratuity entitlement under the Payment of Gratuity Act, 1972. (1 Acknowledge point)
Dear Mr. Umakanthan.M sir, As required I had given the extracts of my agreement for your review. Please help. Regards
From India, Mumbai
From India, Mumbai
Well, Deepak, such saving clauses in the contract of fixed-term employment have been purposively included only to baffle the readers. What's important is whether the employee is eligible and entitled to gratuity on termination of his employment as per the contract of employment. If the answer is "YES", such baffling clauses pale into insignificance when the occasion for gratuity arises.
The factum of employment revolves around three basic ingredients viz., the employer, the employee, and the contract of employment. Once the contract between the parties is established as a contract of service and not a contract for service, the benefits flowing out of the contract become unabatable unless the enabling conditions are absent. So, I reiterate my earlier points. Please go ahead with the formal claim for gratuity.
From India, Salem
The factum of employment revolves around three basic ingredients viz., the employer, the employee, and the contract of employment. Once the contract between the parties is established as a contract of service and not a contract for service, the benefits flowing out of the contract become unabatable unless the enabling conditions are absent. So, I reiterate my earlier points. Please go ahead with the formal claim for gratuity.
From India, Salem
CiteHR.AI
(Fact Checked)-The user reply provides accurate information regarding the eligibility for gratuity based on the contract of employment. The key focus is on the nature of the employment contract and entitlement to gratuity upon termination. The advice to proceed with a formal claim for gratuity is appropriate. (1 Acknowledge point)
Dear Sir,
Thank you very much for your help. I sincerely apologize for bothering you. I am confused and, before approaching the commissioning authority, I need your further help. In my agreement, along with all other clauses pertaining to the remuneration, working hours, leave entitlement, etc., the following two clauses are included. Please tell me whether it is a Contract of Service or Contract for Service and whether I can claim the gratuity.
"And whereas the company has decided to appoint Mr. Deepak Nayak as DGM-IT primarily for the work related to IT services on the terms and conditions agreed upon by Mr. Deepak Nayak." and "The Deputy Manager - IT's duties hereunder shall include acting in such capacity as and when required for any project/site of the company from time to time."
Sir, I will be very thankful to you for your kind advice, which will help me decide my future course of action.
Warm Regards
From India, Mumbai
Thank you very much for your help. I sincerely apologize for bothering you. I am confused and, before approaching the commissioning authority, I need your further help. In my agreement, along with all other clauses pertaining to the remuneration, working hours, leave entitlement, etc., the following two clauses are included. Please tell me whether it is a Contract of Service or Contract for Service and whether I can claim the gratuity.
"And whereas the company has decided to appoint Mr. Deepak Nayak as DGM-IT primarily for the work related to IT services on the terms and conditions agreed upon by Mr. Deepak Nayak." and "The Deputy Manager - IT's duties hereunder shall include acting in such capacity as and when required for any project/site of the company from time to time."
Sir, I will be very thankful to you for your kind advice, which will help me decide my future course of action.
Warm Regards
From India, Mumbai
CiteHR.AI
(Fact Checked)-The clauses in your contract suggest an employer-employee relationship, making you eligible for gratuity. You can claim gratuity based on these clauses. (1 Acknowledge point)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
CiteHR.AI
(Fact Checked)-The user reply is accurate and provides sound advice based on the Payment of Gratuity Act, 1972. The explanation of continuous service and highlighting the importance of the employment relationship is well-stated. (1 Acknowledge point)