If a worker is in service with annual contracts and retrenchment is being paid every year, will he also be eligible for Gratuity at 5 years? There have been no gaps in contracts, and the contractor is also the same.
Thanks and regards
From India
Acknowledge(0)
Amend(0)
Thanks and regards
From India
Acknowledge(0)Amend(0)
The retrenchment compensation paid for the past year cannot be set off against gratuity. Once the employee is terminated from service and is eligible to receive gratuity, then only it is paid. Any payment made earlier while the employee continues to be in service cannot be adjusted against gratuity. Even otherwise also it is not to be adjusted, let us say that an employee with 10 years of service is suddenly terminated of service, he is to be paid retrenchment compensation and gratuity separately.
From India, Mumbai
Acknowledge(0)Amend(0)
1655From India, Mumbai
Acknowledge(0)Amend(0)
Dear Colleague,
The word "Retrenchment" is something different and requires deeper understanding.
Industrial Disputes Act 1947: 2(oo) defines "retrenchment" as the termination by the employer of the service of a workman for any reason whatsoever, other than as a punishment inflicted by way of disciplinary action. However, it does not include:
(a) voluntary retirement of the workman; or
(b) retirement of the workman upon reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation to that effect; or
[(bb) termination of the service of the workman due to the non-renewal of the contract of employment between the employer and the workman concerned upon its expiry, or if such contract is terminated under a stipulation to that effect contained therein; or]
(c) termination of the service of a workman on the grounds of continued ill-health.
Therefore, it is important to use the term "Retrenchment" correctly, especially since you mentioned that it is paid out annually. Retrenchment compensation is payable upon the termination of any employment as per Section 2(oo) and not otherwise.
When dealing with yearly contracts, and if these contracts are renewed annually as you mentioned with the term "CONTRACTOR," in the case of contract employees, if they complete four years and 240 days in the fifth year, they become eligible for Gratuity.
In both scenarios, the liability lies with the Contractor. Therefore, it is essential to have a thorough understanding of these subjects, considering that you are more familiar with the facts than us, who are sharing our perspectives. Please make informed decisions based on this understanding.
Thank you.
From India, Chennai
Acknowledge(0)Amend(0)
The word "Retrenchment" is something different and requires deeper understanding.
Industrial Disputes Act 1947: 2(oo) defines "retrenchment" as the termination by the employer of the service of a workman for any reason whatsoever, other than as a punishment inflicted by way of disciplinary action. However, it does not include:
(a) voluntary retirement of the workman; or
(b) retirement of the workman upon reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation to that effect; or
[(bb) termination of the service of the workman due to the non-renewal of the contract of employment between the employer and the workman concerned upon its expiry, or if such contract is terminated under a stipulation to that effect contained therein; or]
(c) termination of the service of a workman on the grounds of continued ill-health.
Therefore, it is important to use the term "Retrenchment" correctly, especially since you mentioned that it is paid out annually. Retrenchment compensation is payable upon the termination of any employment as per Section 2(oo) and not otherwise.
When dealing with yearly contracts, and if these contracts are renewed annually as you mentioned with the term "CONTRACTOR," in the case of contract employees, if they complete four years and 240 days in the fifth year, they become eligible for Gratuity.
In both scenarios, the liability lies with the Contractor. Therefore, it is essential to have a thorough understanding of these subjects, considering that you are more familiar with the facts than us, who are sharing our perspectives. Please make informed decisions based on this understanding.
Thank you.
From India, Chennai
Acknowledge(0)Amend(0)Engage with peers to discuss and resolve work and business challenges collaboratively. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Register and Log In.
Gratuity Benefits-pOINTS TO BE NOTED.docx