Good evening - We started a partnership firm in February 2015 and 1 employee joined in June 2017 and it had 12 employees until March 2019. In March 2019, we did not convert our partnership firm to pvt ltd but registered new company with same name and pvt ltd. We did not provide new offer letters, joining letters to existing 12 employees of partnership firm. From March 2019 onwards, we paid all salaries, PF, health insurance from the pvt ltd company but had not registered for gratuity even if we crossed 15 employees. Now in June 2024, the employee that had joined in 2017 has resigned and asking for gratuity as his salary was processed by pvt ltd firm and has salary slips, pf from it. However, he was employee of partnership firm since his joining and no new joining letter was provided from pvt ltd firm. Can you please advise if gratuity is applicable to him?
From India, Pune
From India, Pune
Unless otherwise communicated to the employees about the service on converting the partnership firm into a company, the joining date of all employees will be the actual joining date in the firm. Therefore, you should pay gratuity to employees who had joined the partnership. Unlike PF and ESI there is no need to register for gratuity. It is automatic once the number of employees becomes 10.
From India, Kannur
4249From India, Kannur
Hi Madhu - sorry I did not understand. For us the employee is still an employee of the partnership firm and it has 4 employees only. We have not informed about conversion from partnership to pvt ltd to any employees. Can you please help to understand better?
From India, Pune
From India, Pune
It's understood all the employees right from 2015 are continued without a break. And your firm crossed 10 employees from March 2019. Since no termination or relieving of any of your employee was effected throughout all are deemed to be continued in employment. Whether partnership or co. it did not affect the continuity. The reason being employees has nothing to do whether it was partnership or co. as it appears nothing about it was communicated to the employees concerned. Therefore, faults if any, cannot be attributed to the employees. If the co is not regd.under the PoG act is the fault of the co. and the right to gratuity vested in employees under the PoG act cannot be nullified. Persons joined in 2017 who resigned in 2024 having completed 5 yrs of continuous service are entitled to gratuity.
From India, Bangalore
From India, Bangalore
The Payment of Gratuity Act, 1972 applies to establishments with 10 or more employees working in the factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, and shops & commercial establishment.
The partnership firms are not an exception but act squarely applied to the establishment being have 10 or more employees on work.
From India, Mumbai
The partnership firms are not an exception but act squarely applied to the establishment being have 10 or more employees on work.
From India, Mumbai
Mr. Sharma,
You had a partnership company in which you had some staff (4 people)
Then you had a pvt ltd company and started paying people from there.
It does not matter if you formally intimate or not, since you are paying the employee from the pvt ltd co, he is working for it. Since the company has more than 10 employee, it is covered under gratuity act.
Since the ownership was the same and no termination was issued or involved, the period counts from the time when the employee joined the partnership firm, unless you have a specific break of service. The courts will reject your contention of the service being different as it is clear that the business and promotors are the same and therefore the employee is eligible for gratuity.
From India, Mumbai
You had a partnership company in which you had some staff (4 people)
Then you had a pvt ltd company and started paying people from there.
It does not matter if you formally intimate or not, since you are paying the employee from the pvt ltd co, he is working for it. Since the company has more than 10 employee, it is covered under gratuity act.
Since the ownership was the same and no termination was issued or involved, the period counts from the time when the employee joined the partnership firm, unless you have a specific break of service. The courts will reject your contention of the service being different as it is clear that the business and promotors are the same and therefore the employee is eligible for gratuity.
From India, Mumbai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc