Can somebody give me clarity on the below said instance? If an employee works for 5 years in a small company where the employee strength is less than 10. How does he claim his gratuity post his resignation?
From India, Madras
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5From India, Madras
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I think that the question would've been clearer if the nature of the company was specified - whether it is a factory, a shop, an establishment, or an educational institution. If it is a factory, the criterion of the number of employees does not restrict the application of the Payment of Gratuity Act, 1972. If the company falls under any of the other categories mentioned, it is not covered by the Act, and the employees are not eligible for gratuity under the Act.
From India, Salem
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From India, Salem
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Respected Umakanthan Sir,
I wish to bring more clarity to this subject, with due respect to you. The PoG Act is applicable to:
(a) every factory, mine, oilfield, plantation, port, and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.
Here, factory, mine, oilfield, plantation, port, and railway company mean a factory, mine, oilfield, plantation, port, and railway company as defined under respective Acts as applicable to it. If 10/20 or more persons are employed in the manufacturing process, then it is a factory (except in Maharashtra where it is now 20/40).
Since the strength of employees is less than 10 in this particular query, the employee is not entitled to Gratuity under the Act. However, in case the employee's strength in the past had crossed 10, then the scenario would be different. Once the law is applicable, it will continue to be applicable even after the strength falls below the threshold.
From India, Mumbai
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I wish to bring more clarity to this subject, with due respect to you. The PoG Act is applicable to:
(a) every factory, mine, oilfield, plantation, port, and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.
Here, factory, mine, oilfield, plantation, port, and railway company mean a factory, mine, oilfield, plantation, port, and railway company as defined under respective Acts as applicable to it. If 10/20 or more persons are employed in the manufacturing process, then it is a factory (except in Maharashtra where it is now 20/40).
Since the strength of employees is less than 10 in this particular query, the employee is not entitled to Gratuity under the Act. However, in case the employee's strength in the past had crossed 10, then the scenario would be different. Once the law is applicable, it will continue to be applicable even after the strength falls below the threshold.
From India, Mumbai
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If the firm had more than 10 employees at any stage and then came down in strength, gratuity may have been applicable.
In this case, from the information provided, entitlement of gratuity does not arise due to the lesser number of employees, and therefore, not attracting the provisions of the Gratuity Act.
From India, Pune
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In this case, from the information provided, entitlement of gratuity does not arise due to the lesser number of employees, and therefore, not attracting the provisions of the Gratuity Act.
From India, Pune
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I would like to say that what Umakanthan Sir has said is perfectly right. The first thing to be considered in order to see whether an establishment will come under the Payment of Gratuity Act is whether it is a factory or another establishment. If it is a factory, the Payment of Gratuity Act is applicable to it even if the number of employees is less than 10.
Now, coming to the definition of a factory, it is a misunderstanding that only a factory with a minimum of 10 workers will come under the coverage of the Factories Act. Please refer to section 85 of the Factories Act and the state government's authority to declare any establishment having less than 10 workers as an establishment coming under the coverage of the Factories Act. There are quite a large number of industries in which establishments will come under the Factories Act, even if the number of employees is less than 10. For example, in paint manufacturing, the Factories Act is applicable if the establishment employs just 3 persons! Therefore, just a bare reading of the Act without sub-clauses and rules made by the appropriate authorities should be discouraged.
From India, Kannur
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Now, coming to the definition of a factory, it is a misunderstanding that only a factory with a minimum of 10 workers will come under the coverage of the Factories Act. Please refer to section 85 of the Factories Act and the state government's authority to declare any establishment having less than 10 workers as an establishment coming under the coverage of the Factories Act. There are quite a large number of industries in which establishments will come under the Factories Act, even if the number of employees is less than 10. For example, in paint manufacturing, the Factories Act is applicable if the establishment employs just 3 persons! Therefore, just a bare reading of the Act without sub-clauses and rules made by the appropriate authorities should be discouraged.
From India, Kannur
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