Dear Sir/Madam,
I would like to inquire how gratuity will be calculated for a contractual employee. I have served a total of 8 years and 9 months in the same IT company under two different payroll consultancies. Initially, I worked for 3 years and 4 months with the first consultancy. After this period, my payroll consultancy was changed without any gap, and I continued to work for another 5 years and 4 months. Due to the impact of Covid-19, my contract was not renewed, leading to a loss of job.
I seek your guidance on whether my gratuity will be based on my total years of service or solely from my current consultancy's date of joining. Your assistance on this matter would be greatly appreciated.
Please reach out to me at
.
Thank you.
From India, Bengaluru
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I would like to inquire how gratuity will be calculated for a contractual employee. I have served a total of 8 years and 9 months in the same IT company under two different payroll consultancies. Initially, I worked for 3 years and 4 months with the first consultancy. After this period, my payroll consultancy was changed without any gap, and I continued to work for another 5 years and 4 months. Due to the impact of Covid-19, my contract was not renewed, leading to a loss of job.
I seek your guidance on whether my gratuity will be based on my total years of service or solely from my current consultancy's date of joining. Your assistance on this matter would be greatly appreciated.
Please reach out to me at
Thank you.
From India, Bengaluru
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You send notices of claim for the entire stretch of 9 years to the principal employer and the two contractors simultaneously. Certainly, all would reject your claim, disowning their liability on some ground or other. Then file a claim against all three before the Controlling Authority for the area where the PE's establishment is situated.
From India, Salem
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6108From India, Salem
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Hi,
You have a strong case for getting gratuity for 8 years and 9 months ( say 9 years) for the continuous service rendered under the same proincipal employer irrespective of number of pay roll consultants under whom you were employed during the correspoding period
The Madras High Court relied on a decision rendered by it earlier in the case of Madras Fertilizers Limited vs. Controlling Authority under Payment of Gratuity Act and Others1 and held that 'gratuity' payable under the Payment of Gratuity Act, 1972, were wages for the purposes of the CLRA. Consequently, by virtue of section 21 (4) of the CLRA, the onus of payment of gratuity would lie on the principal employer in the event of a contractor’s failure to pay gratuity.
What you need to do is to make an application (claim ) to the two consutancy contrators under whom you were employed and also the principalemployer,seeking to settle your grauity for the entire period of 8 years and 9 months ( rounded off to 9 years) and in the event of their failure to settle the claim within 30 days ( either no reply or declien of claim as the case may be ) , you can move the controlling authourity under gratuity of appropriate government applicable to your establishmnet by way of a compalint in the prescriced form and which will eventually culminate in your claim for gratuity being successfully settled after two or three sittings of all necesssary parties .
All the best
P.Senthilkumar
9884009193
From India, Chennai
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You have a strong case for getting gratuity for 8 years and 9 months ( say 9 years) for the continuous service rendered under the same proincipal employer irrespective of number of pay roll consultants under whom you were employed during the correspoding period
The Madras High Court relied on a decision rendered by it earlier in the case of Madras Fertilizers Limited vs. Controlling Authority under Payment of Gratuity Act and Others1 and held that 'gratuity' payable under the Payment of Gratuity Act, 1972, were wages for the purposes of the CLRA. Consequently, by virtue of section 21 (4) of the CLRA, the onus of payment of gratuity would lie on the principal employer in the event of a contractor’s failure to pay gratuity.
What you need to do is to make an application (claim ) to the two consutancy contrators under whom you were employed and also the principalemployer,seeking to settle your grauity for the entire period of 8 years and 9 months ( rounded off to 9 years) and in the event of their failure to settle the claim within 30 days ( either no reply or declien of claim as the case may be ) , you can move the controlling authourity under gratuity of appropriate government applicable to your establishmnet by way of a compalint in the prescriced form and which will eventually culminate in your claim for gratuity being successfully settled after two or three sittings of all necesssary parties .
All the best
P.Senthilkumar
9884009193
From India, Chennai
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Thank you so much Sir, for your valuable suggestions and help. i will do follow the same.
From India, Bengaluru
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From India, Bengaluru
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Hello Umakanthan Sir,
I dropped a private message to you on 4th November, requesting your expert advice on the Gratuity amount recently introduced by my payroll company that I am contracted with. Could you please confirm if the same needs to be posted in a public forum to be acknowledged?
Thank you.
From India, Bengaluru
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I dropped a private message to you on 4th November, requesting your expert advice on the Gratuity amount recently introduced by my payroll company that I am contracted with. Could you please confirm if the same needs to be posted in a public forum to be acknowledged?
Thank you.
From India, Bengaluru
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Sorry, Gurcharan for having forgotten to respond to your private message. At times, whenever I come across oft-repeated questions, I usually postpone my further response so that either the questioner would himself go through the earlier answers or someone else would come out with his own answer with yet another dimension to the query. Besides that, no such intention to answer those queries raised publicly only though I prefer the latter when the same query is raised simultaneously through a private message and in the open thread as well. In your case, it is actually and simply forgetfulness on my part.
Anyway, since the situation you explained is similar to trimming the feet to fit the shoes, I think an open answer is more preferable. The issue, in short as I understand, is that the management reduces the gross salary to keep the CTC the same by deducting the employer's contribution to statutory gratuity just to settle the audit objection - am I correct?
Audit is primarily concerned with the methodical observance of the predetermined norms of expenditure rather than the purpose of the expenditure. The purpose of the inclusion of the actuarial cost of gratuity into the CTC is only to reduce the burden of payment of lump sum gratuity when the occasion arises. That's why the periodical payments of the employer's shares to EPF, ESI, and Statutory Gratuity are included in the CTC. But, unlike EPF and ESI, statutory gratuity does not require any contribution from the employee. Though Section 4-A of the Payment of Gratuity Act, 1972 mandates the taking up of Insurance Policy towards gratuity, enforcement notifications are yet to be issued by the appropriate Governments under the Act.
In this backdrop, therefore,
FIRSTLY, the deduction of the periodical employer's contributions from the gross salary of the employees is illegal.
SECONDLY, CTC is only an accounting tool or document showing the overall expenses incurred by the employer towards an employee per year and as such it does not have any legal value or sanction whereas the gross salary is the actual salary fixed and periodically paid under the contract of employment and in appropriate cases under the Payment of Wages Act, 1936, and the Minimum Wages Act, 1948 as the case may be.
THIRDLY, therefore, the reduction of the gross salary amounts to a breach of the contract of employment and if done unilaterally by the employer, requires the employee's acceptance and in case the employee accepts the same out of compulsion or otherwise, it tantamounts to "contracting out" which is prohibited under the Labour Jurisprudence.
FINALLY AND ONCE AGAIN, such a deduction becomes an illegal deduction also.
By and large, it is my suggestion that all the employees should make a joint representation to the management highlighting the above legal position.
From India, Salem
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Anyway, since the situation you explained is similar to trimming the feet to fit the shoes, I think an open answer is more preferable. The issue, in short as I understand, is that the management reduces the gross salary to keep the CTC the same by deducting the employer's contribution to statutory gratuity just to settle the audit objection - am I correct?
Audit is primarily concerned with the methodical observance of the predetermined norms of expenditure rather than the purpose of the expenditure. The purpose of the inclusion of the actuarial cost of gratuity into the CTC is only to reduce the burden of payment of lump sum gratuity when the occasion arises. That's why the periodical payments of the employer's shares to EPF, ESI, and Statutory Gratuity are included in the CTC. But, unlike EPF and ESI, statutory gratuity does not require any contribution from the employee. Though Section 4-A of the Payment of Gratuity Act, 1972 mandates the taking up of Insurance Policy towards gratuity, enforcement notifications are yet to be issued by the appropriate Governments under the Act.
In this backdrop, therefore,
FIRSTLY, the deduction of the periodical employer's contributions from the gross salary of the employees is illegal.
SECONDLY, CTC is only an accounting tool or document showing the overall expenses incurred by the employer towards an employee per year and as such it does not have any legal value or sanction whereas the gross salary is the actual salary fixed and periodically paid under the contract of employment and in appropriate cases under the Payment of Wages Act, 1936, and the Minimum Wages Act, 1948 as the case may be.
THIRDLY, therefore, the reduction of the gross salary amounts to a breach of the contract of employment and if done unilaterally by the employer, requires the employee's acceptance and in case the employee accepts the same out of compulsion or otherwise, it tantamounts to "contracting out" which is prohibited under the Labour Jurisprudence.
FINALLY AND ONCE AGAIN, such a deduction becomes an illegal deduction also.
By and large, it is my suggestion that all the employees should make a joint representation to the management highlighting the above legal position.
From India, Salem
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