Kindly let me know if an employer opens 3-4 private companies and keeps the employees below 10 in each company/establishment, are employees entitled to receive gratuity? There are many cases where cunning employers do this. I have 2-3 friends who have been working in Delhi for the last 20 years, and according to them, the same employer has opened 2-3 private companies, and the same employees work for all the companies. However, the employer has enrolled them in different companies in such a way that the number of employees does not exceed 10. What is the solution for those who have spent their entire lives with the same employer to receive gratuity?
Please let me know if you need further clarification or assistance.
From India, New Delhi
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2Please let me know if you need further clarification or assistance.
From India, New Delhi
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If the units are independent of each other then they may not be entitle to Gratuity but if the management is same & unit are interdepend then certainly they are eligible for Gratuity.
From India, Pune
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From India, Pune
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If you can prove that the nature of operations of these different establishments is the same and that there exists financial interdependency among these firms, the authority under the Payment of Gratuity Act can club these different establishments owned by the same employer and bring coverage to the establishments. This is more effectively done by ESI and PF authorities.
The Payment of Gratuity Act is applicable to factories, mines, plantations, ports, and oil fields without any reference to the number of employees. The requirement of 10 or more employees for coverage applies only if the establishment is a shop or commercial establishment other than a factory, oil field, plantation, port, or railway company.
From India, Kannur
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The Payment of Gratuity Act is applicable to factories, mines, plantations, ports, and oil fields without any reference to the number of employees. The requirement of 10 or more employees for coverage applies only if the establishment is a shop or commercial establishment other than a factory, oil field, plantation, port, or railway company.
From India, Kannur
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Approach the labor commissioner of the area with full details. By this time, employees will be knowing the full inner details of how the company is working and how management is shifting them from company to company and keeping the strength below 10. Ask for an investigation by the Labor Commissioner and hope for the best. But also remember, the employee who has complained will be in danger of losing his job. So unity is strength, and employees need to join hands and force the issue.
From India, Pune
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From India, Pune
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Dear Mr. Raju,
Already, Mr. Madhu has given his valued opinion. Furthermore, no one can prevent anyone from opening or registering a company/companies unless they are illegal. Here, we have to be very sympathetic as it is a violation of a workman's rights. The proprietor has already taken immunity against laws, rules, and cracks existing within the law.
A detailed study of those firms is required to be done:
- Name of proprietor/owner/board of directors/registration with ROC/Nature of work/Number of workmen engaged, etc.
All the information needs to be compiled to have a "Definite Meaning" so that a legal fight can be pursued. All the workmen involved need to stand united to fight. In simple terms, the workmen engaged are not eligible for gratuity, as you have already pointed out.
From India, Mumbai
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Already, Mr. Madhu has given his valued opinion. Furthermore, no one can prevent anyone from opening or registering a company/companies unless they are illegal. Here, we have to be very sympathetic as it is a violation of a workman's rights. The proprietor has already taken immunity against laws, rules, and cracks existing within the law.
A detailed study of those firms is required to be done:
- Name of proprietor/owner/board of directors/registration with ROC/Nature of work/Number of workmen engaged, etc.
All the information needs to be compiled to have a "Definite Meaning" so that a legal fight can be pursued. All the workmen involved need to stand united to fight. In simple terms, the workmen engaged are not eligible for gratuity, as you have already pointed out.
From India, Mumbai
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If an employer is doing all this just to avoid gratuity payments, they are making a big mistake. A trail of employees being shifted from company A to B to C will be evident. Employees need to unite and dig out the trail, making the Labour Commissioner aware of this hoodwinking of welfare laws. Some employee has to take on this burden and bring the facts out into public knowledge. Then the employer will realize it is cheaper and safer to opt for compulsory insurance for gratuity rather than taking chances with the transfer of employees from time to time. Speak out, write to labor authorities, and request an investigation.
From India, Pune
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From India, Pune
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This is in continuation of all the positive observations of the learned friends. The triple benefits of termination of employment, namely Provident Fund, Pension, and Gratuity, became possible only after a very long struggle put up by the working classes. These retirement benefits are great sources of solace to the marginalized masses of labor in the absence of uniform and sufficient social security measures ensured by the State.
Of course, the scale of operations of the business establishments, the cumbersome nature of calculations, and the periodical administrative costs involved in the running of the separate agencies for the purpose are the practical constraints supporting the selective application of such beneficial social security labor legislations based on the number of employees in the concerned establishments. In reality, this statutory concession is misused by the majority of employers through the fragmentation of their business ventures into small legal entities under one roof or elsewhere, keeping the employees constantly unaware of the whereabouts of the actual employment by rotating their services frequently within the various establishments to avoid them earning the required minimum qualifying service in any one establishment, prevent unionization of such unorganized workmen, and the like.
Unfortunately, the enforcement agencies also seem to be lacking the capability to crack down on such unfair labor practices for obvious reasons. So, it is high time that the Central and State Governments address these issues to eliminate the selective application of such social security labor legislations based solely on numbers in all respects. Let us await the arrival of the proposed Comprehensive Labor Codes in their final shape.
From India, Salem
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Of course, the scale of operations of the business establishments, the cumbersome nature of calculations, and the periodical administrative costs involved in the running of the separate agencies for the purpose are the practical constraints supporting the selective application of such beneficial social security labor legislations based on the number of employees in the concerned establishments. In reality, this statutory concession is misused by the majority of employers through the fragmentation of their business ventures into small legal entities under one roof or elsewhere, keeping the employees constantly unaware of the whereabouts of the actual employment by rotating their services frequently within the various establishments to avoid them earning the required minimum qualifying service in any one establishment, prevent unionization of such unorganized workmen, and the like.
Unfortunately, the enforcement agencies also seem to be lacking the capability to crack down on such unfair labor practices for obvious reasons. So, it is high time that the Central and State Governments address these issues to eliminate the selective application of such social security labor legislations based solely on numbers in all respects. Let us await the arrival of the proposed Comprehensive Labor Codes in their final shape.
From India, Salem
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Dear Mr. Uma,
What you have written above is true. In the context of our nation, past 70 years, things have moved on - many good developments, many good laws, and so on. But our basic nature has remained a mystery. Industrialists look for quick gains for themselves by and large, and in the process try for shortcuts - keep the number of employees below 19 to avoid PF (earlier), open 3-4 firms, and circumvent Gratuity. With an overwhelming population and desperate job seekers, these issues get overlooked, and the law/regulatory agencies of the State are lethargic and corrupt.
My question is, as long as we don't change our quick-rich syndrome, no law is going to help. As many laws are there, that many loopholes. Some specialize in finding out loopholes in the law. We have the maximum number of laws in the world. Following the law in good spirit and for public good is the only way things can change. The IT Act 1961 is a classic example of amendments galore, such that the original law has totally changed.
Deep introspection is the need of the hour. Top leaders need to start this introspection, cutting across narrow loyalties, and work for India as a whole. Take Japan - no natural resources, totally dependent on imports, but so productive that they produce more than twice our GDP in a place which is largely mountainous and 1/5th of our landmass area, with frequent earthquakes and far fewer populations. Top-class education, focus on quality, and decisive leadership have brought Japan from a totally destroyed nation to where it is now. We have lessons to learn from this, but will we?
Sorry if the post is off-topic from normal HR posts.
From India, Pune
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What you have written above is true. In the context of our nation, past 70 years, things have moved on - many good developments, many good laws, and so on. But our basic nature has remained a mystery. Industrialists look for quick gains for themselves by and large, and in the process try for shortcuts - keep the number of employees below 19 to avoid PF (earlier), open 3-4 firms, and circumvent Gratuity. With an overwhelming population and desperate job seekers, these issues get overlooked, and the law/regulatory agencies of the State are lethargic and corrupt.
My question is, as long as we don't change our quick-rich syndrome, no law is going to help. As many laws are there, that many loopholes. Some specialize in finding out loopholes in the law. We have the maximum number of laws in the world. Following the law in good spirit and for public good is the only way things can change. The IT Act 1961 is a classic example of amendments galore, such that the original law has totally changed.
Deep introspection is the need of the hour. Top leaders need to start this introspection, cutting across narrow loyalties, and work for India as a whole. Take Japan - no natural resources, totally dependent on imports, but so productive that they produce more than twice our GDP in a place which is largely mountainous and 1/5th of our landmass area, with frequent earthquakes and far fewer populations. Top-class education, focus on quality, and decisive leadership have brought Japan from a totally destroyed nation to where it is now. We have lessons to learn from this, but will we?
Sorry if the post is off-topic from normal HR posts.
From India, Pune
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I do not understand the Basic Purpose of putting up such questions for discussion. I somewhat am getting a feeling that professional HR/IR issues are getting mixed-up with the concept of basic Social Security, an issue that be uphold by one and all in the society. Even the basic concept of Judiciary is to protect professionalism from criminalisation.
Concept of Social Security in general sense is that it refers to protection provided to individual members of the society by the society against providential mishaps beyond control of an individual person. The underlying philosophy of social security is that the State shall make itself responsible for ensuring a minimum standard of material welfare to all its citizens on a basis wide enough to cover all the main contingencies of life. In other sense, social security is primarily an instrument of social and economic justice.
According to a definition given in the ILO, “Social security is the security that society furnishes through appropriate organisation against certain risks to which its members are exposed. These risks are essentially contingencies of life which the individual of small means cannot effectively provide by his own ability, or foresight alone or even in private combination with his fellows”.
Social Security is defined as “a means of securing an income to take the place of earnings when they are interrupted by unemployment, sickness or accident to provide for the retirement through old age, to provide against loss of support by death of another person or to meet exceptional expenditure connected with birth, death, or marriage. The purpose of social security is to provide an income up to a minimum and also medical treatment to bring the interruption of earnings to an end as soon as possible.
Where is it written in the “Payment of Gratuity Act” that organisations having less than 10 employees are “barred” from paying Gratuity? In fact, the question itself says intermediate activities are separated out purposely to avoid “Payment of Gratuity”. Now, should this question be admitted into the forum?
I have reservations about it.
From India, Pune
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Concept of Social Security in general sense is that it refers to protection provided to individual members of the society by the society against providential mishaps beyond control of an individual person. The underlying philosophy of social security is that the State shall make itself responsible for ensuring a minimum standard of material welfare to all its citizens on a basis wide enough to cover all the main contingencies of life. In other sense, social security is primarily an instrument of social and economic justice.
According to a definition given in the ILO, “Social security is the security that society furnishes through appropriate organisation against certain risks to which its members are exposed. These risks are essentially contingencies of life which the individual of small means cannot effectively provide by his own ability, or foresight alone or even in private combination with his fellows”.
Social Security is defined as “a means of securing an income to take the place of earnings when they are interrupted by unemployment, sickness or accident to provide for the retirement through old age, to provide against loss of support by death of another person or to meet exceptional expenditure connected with birth, death, or marriage. The purpose of social security is to provide an income up to a minimum and also medical treatment to bring the interruption of earnings to an end as soon as possible.
Where is it written in the “Payment of Gratuity Act” that organisations having less than 10 employees are “barred” from paying Gratuity? In fact, the question itself says intermediate activities are separated out purposely to avoid “Payment of Gratuity”. Now, should this question be admitted into the forum?
I have reservations about it.
From India, Pune
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Dear Soumitra,
The basic concept, idea, or query in this post by the querist is a solution to the diversionary and splitting tactics taken up by the owner of the company. The owner is allegedly operating several companies and keeps transferring employees to avoid payment of gratuity. It is well known that a company can pay gratuity to an employee even if it has only one employee, but here, the owner has more than the legally stipulated minimum of 10 employees yet plays around with the figures by transferring employees.
The querist is seeking a legal solution to the issue of the employer taking advantage of employees who desperately need their jobs. HR is tasked with ensuring that social security schemes like the Maternity Act and Gratuity are turned into a reality on the ground. Therefore, the question is very much admissible in my opinion.
From India, Pune
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The basic concept, idea, or query in this post by the querist is a solution to the diversionary and splitting tactics taken up by the owner of the company. The owner is allegedly operating several companies and keeps transferring employees to avoid payment of gratuity. It is well known that a company can pay gratuity to an employee even if it has only one employee, but here, the owner has more than the legally stipulated minimum of 10 employees yet plays around with the figures by transferring employees.
The querist is seeking a legal solution to the issue of the employer taking advantage of employees who desperately need their jobs. HR is tasked with ensuring that social security schemes like the Maternity Act and Gratuity are turned into a reality on the ground. Therefore, the question is very much admissible in my opinion.
From India, Pune
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