I have a query regarding Gratuity.
An employee is working in road Infrastructure Company. He completed 5 years of his job he joined the Company in July 2013. When he resigned, He demanded his gratuity and experience certificate for the tenure he served for the company (More than 5 years). Company management denied his request by saying that he served initially 2 years in the subsidiary/SPV company of theirs and then he transferred into parent company so his tenure of 5 years is yet not completed because he worked in two different companies and he will be given two different experience certificates one is from SPV company and the second one is from parent company.
Employee challenged their statement by saying that:
1) He was issued appointment letter on the letter head of parent company. So they can’t put his name in subsidiary company without his consent and intimation. Company did so in a fraud and cheating intension.
2) He was paid cash payment on combined sheet of employees and no salary slip was given to him. His deducted PF was submitted in the PF code of subsidiary company about which he was not aware and nobody intimate him.
3) The registered address of subsidiary company and parent company is same. Directors of both companies are same. Parent company hold 100% equity shares of subsidiary company during all the tenure of existence of subsidiary company. They can’t deny that the ownership of both company are same.
4) Subsidiary company dissolved in parent company in Nov. 2017 after completion it’s project. If any old liabilities comes on the name of subsidiary company that also goes to the parent company.
Is this claim of employee right and if it is so then under which acts he can lodge a complaint against company? or the company is succeed in manipulating the employee?
From India, Indore
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An employee is working in road Infrastructure Company. He completed 5 years of his job he joined the Company in July 2013. When he resigned, He demanded his gratuity and experience certificate for the tenure he served for the company (More than 5 years). Company management denied his request by saying that he served initially 2 years in the subsidiary/SPV company of theirs and then he transferred into parent company so his tenure of 5 years is yet not completed because he worked in two different companies and he will be given two different experience certificates one is from SPV company and the second one is from parent company.
Employee challenged their statement by saying that:
1) He was issued appointment letter on the letter head of parent company. So they can’t put his name in subsidiary company without his consent and intimation. Company did so in a fraud and cheating intension.
2) He was paid cash payment on combined sheet of employees and no salary slip was given to him. His deducted PF was submitted in the PF code of subsidiary company about which he was not aware and nobody intimate him.
3) The registered address of subsidiary company and parent company is same. Directors of both companies are same. Parent company hold 100% equity shares of subsidiary company during all the tenure of existence of subsidiary company. They can’t deny that the ownership of both company are same.
4) Subsidiary company dissolved in parent company in Nov. 2017 after completion it’s project. If any old liabilities comes on the name of subsidiary company that also goes to the parent company.
Is this claim of employee right and if it is so then under which acts he can lodge a complaint against company? or the company is succeed in manipulating the employee?
From India, Indore
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Dear Mahesh,
If the facts of the case presented in your post are true and correct, the employee can file a claim for gratuity against the Parent Company for the entire period of service he rendered as per the directions and with its knowledge as well under Section 7(4)(b) of the Payment of Gratuity Act, 1972 before the Controlling Authority appointed under the Act for the place where he worked last. Prior to that, he would have to issue a formal notice of claim to the employer. Therefore, it is better to engage the services of an advocate to handle the formalities and represent the employee before the C.A., who is a quasi-judicial authority.
From India, Salem
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6185If the facts of the case presented in your post are true and correct, the employee can file a claim for gratuity against the Parent Company for the entire period of service he rendered as per the directions and with its knowledge as well under Section 7(4)(b) of the Payment of Gratuity Act, 1972 before the Controlling Authority appointed under the Act for the place where he worked last. Prior to that, he would have to issue a formal notice of claim to the employer. Therefore, it is better to engage the services of an advocate to handle the formalities and represent the employee before the C.A., who is a quasi-judicial authority.
From India, Salem
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Dear Umakanthan Ji,
Thank you for your valuable suggestions. All facts in the post are true. I studied section 7(4)(b) of the Payment of Gratuity Act, 1972, which states that in case of any dispute regarding gratuity, one can represent the matter to the Controlling Authority. How can an individual find out about the Controlling Authority at their workplace and obtain their contact information? Additionally, I would like to inquire whether a case of fraud or cheating can be filed against an employer for not paying gratuity, and if so, under which act the employer can be penalized for harassing and cheating employees.
In my company, there are more than 50 cases where the employer is not fulfilling gratuity payments to employees by transferring them between subsidiary companies without the employees' knowledge of the rules and intentions behind the employer's actions.
Thank you.
From India, Indore
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Thank you for your valuable suggestions. All facts in the post are true. I studied section 7(4)(b) of the Payment of Gratuity Act, 1972, which states that in case of any dispute regarding gratuity, one can represent the matter to the Controlling Authority. How can an individual find out about the Controlling Authority at their workplace and obtain their contact information? Additionally, I would like to inquire whether a case of fraud or cheating can be filed against an employer for not paying gratuity, and if so, under which act the employer can be penalized for harassing and cheating employees.
In my company, there are more than 50 cases where the employer is not fulfilling gratuity payments to employees by transferring them between subsidiary companies without the employees' knowledge of the rules and intentions behind the employer's actions.
Thank you.
From India, Indore
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Dear Mahesh,
I can very well understand your anger, which cannot be undermined as unjustified or unnecessary. However, in such moments of anger caused by despair and dejection, one should focus attention towards the remedial measures readily available before him only and avoid an excess of enthusiasm dictated by emotions. In general, employment disputes are a subject matter of Labor Jurisprudence only. In particular, any dispute relating to a service condition covered by an exclusive and special Labor Law should be resolved under such Law only. Gratuity is such a condition of employment covered by a special Law, namely the Payment of Gratuity Act, 1972, which is a complete code in itself regarding the gratuity of industrial employees. When the gratuity payable to you is denied by the employer based on a contention that is untenable, you have to approach the forum designated for the purpose only. You cannot plead inability on the ground of difficulty in identifying the forum for redress. Go through the website of the State, and you will find the C.A under the P.G Act for the place where you worked last, or make a visit to any Labor Office in your area, and they will guide you.
Thank you.
From India, Salem
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I can very well understand your anger, which cannot be undermined as unjustified or unnecessary. However, in such moments of anger caused by despair and dejection, one should focus attention towards the remedial measures readily available before him only and avoid an excess of enthusiasm dictated by emotions. In general, employment disputes are a subject matter of Labor Jurisprudence only. In particular, any dispute relating to a service condition covered by an exclusive and special Labor Law should be resolved under such Law only. Gratuity is such a condition of employment covered by a special Law, namely the Payment of Gratuity Act, 1972, which is a complete code in itself regarding the gratuity of industrial employees. When the gratuity payable to you is denied by the employer based on a contention that is untenable, you have to approach the forum designated for the purpose only. You cannot plead inability on the ground of difficulty in identifying the forum for redress. Go through the website of the State, and you will find the C.A under the P.G Act for the place where you worked last, or make a visit to any Labor Office in your area, and they will guide you.
Thank you.
From India, Salem
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Dear All,
Nowadays, most establishments are considering gratuity as part of CTC. However, when an employee leaves or resigns before completing five years, the employer is not paying out the gratuity. I believe that if it is included as part of the salary/CTC, at the very least, the deducted amount should be paid to the departing employee.
Please share your opinion.
From India, Gandhidham
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Nowadays, most establishments are considering gratuity as part of CTC. However, when an employee leaves or resigns before completing five years, the employer is not paying out the gratuity. I believe that if it is included as part of the salary/CTC, at the very least, the deducted amount should be paid to the departing employee.
Please share your opinion.
From India, Gandhidham
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To EKCLTD,
In my company, gratuity is not a part of CTC, but the rule of gratuity is very clear that an employee has to complete 5 years of regular service in a company. In my view, adding gratuity in CTC is not a good practice. It creates confusion regarding the deducted amount. However, if an employer is adding gratuity in the CTC, then he must properly guide the employee at the time of joining that it will be returned to him only after completion of 5 years, and the intimation responsibilities must be of the employer because you can't expect that every employee is aware of the rule of gratuity. If the employer intimates the employee and does not return the gratuity before 5 years, then he is right at his end.
From India, Indore
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In my company, gratuity is not a part of CTC, but the rule of gratuity is very clear that an employee has to complete 5 years of regular service in a company. In my view, adding gratuity in CTC is not a good practice. It creates confusion regarding the deducted amount. However, if an employer is adding gratuity in the CTC, then he must properly guide the employee at the time of joining that it will be returned to him only after completion of 5 years, and the intimation responsibilities must be of the employer because you can't expect that every employee is aware of the rule of gratuity. If the employer intimates the employee and does not return the gratuity before 5 years, then he is right at his end.
From India, Indore
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Dear EKCLTD,
You can find a lot of discussions in this forum regarding C.T.C. Of late, some of the very knowledgeable members too seem to be a bit tilting towards the idea of C.T.C forming part of the employment contract and as such hold the view that gratuity, if shown in the C.T.C, should be paid irrespective of the length of service of the employee in case of his early termination. At the outset, of course, I would accept this as a plausible argument for deep consideration.
At the same time, however, I am unable to accept such a contention because of the very nature of the concept of C.T.C. It could be a mere statement projecting the overall cost to the company per employee per year. As such, at the most C.T.C is a conceptual aid to assess the employer's overall financial commitment toward every hired position or job including salary/wages and all other fringe benefits payable per year. If you break it down on a monthly basis, it is the sum of monthly gross salary/wages + indirect benefits quantifiable in terms of money. Those indirect benefits, again, are statutory and non-statutory. Though such statutory benefits have to be incurred by the employer per employee, their final payments are certainly subject to the conditions imposed by the statutes only.
Therefore, since gratuity is just included in such a statement of presumptive assessment only for the guidance of the employer and employees concerned for deciding the overall acceptable compensation package, the employee cannot demand it when he has not fulfilled the statutory conditions attached to it.
From India, Salem
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You can find a lot of discussions in this forum regarding C.T.C. Of late, some of the very knowledgeable members too seem to be a bit tilting towards the idea of C.T.C forming part of the employment contract and as such hold the view that gratuity, if shown in the C.T.C, should be paid irrespective of the length of service of the employee in case of his early termination. At the outset, of course, I would accept this as a plausible argument for deep consideration.
At the same time, however, I am unable to accept such a contention because of the very nature of the concept of C.T.C. It could be a mere statement projecting the overall cost to the company per employee per year. As such, at the most C.T.C is a conceptual aid to assess the employer's overall financial commitment toward every hired position or job including salary/wages and all other fringe benefits payable per year. If you break it down on a monthly basis, it is the sum of monthly gross salary/wages + indirect benefits quantifiable in terms of money. Those indirect benefits, again, are statutory and non-statutory. Though such statutory benefits have to be incurred by the employer per employee, their final payments are certainly subject to the conditions imposed by the statutes only.
Therefore, since gratuity is just included in such a statement of presumptive assessment only for the guidance of the employer and employees concerned for deciding the overall acceptable compensation package, the employee cannot demand it when he has not fulfilled the statutory conditions attached to it.
From India, Salem
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