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Prorata terminal benefits (Labour & Service Law)

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This query is : Resolved


Author : Rama mohan Acharya

Posted On 25 February 2011 at 17:03

A person had worked as a central Govt. servant for three years. He resigned and joined in a central PSU. on reliving he received the unutilised leave and the PF accumulation. As only served for 3 years no gratuity was paid.The PSU where he joined has a provision of acceptance of prorata gratuity from the preveous employer and that period shall be counted as the service for the purpose of payment of gratuity.
Whether the central govt. should transfer the prorata gratuity of 3 years to the PSU or not? If yes, what should be done by the employees.
DOPT om No.28016/5/85-Est(c) dtd 31.1.1986 is also refered.




Expert : R.Ramachandran

Posted On 26 February 2011 at 00:22

Please attach the DOPT om No.28016/5/85-Est(c) dtd 31.1.1986 for reference.



Expert : Advocate. Arunagiri

Posted On 26 February 2011 at 07:25

If he resigned and joined in the PSU he is not eligible for gratuity. If he had got the employment after forwarding the application through proper channel, if the new assignment is treated as continuation of the service, he is eligible for gratuity.



Author : Rama mohan Acharya

Posted On 26 February 2011 at 08:17

Thank u very much Mr. Arunagiri for the vital point which I missed to mentioned. In this case the Previous employer issued NOC.



Author : Rama mohan Acharya

Posted On 26 February 2011 at 08:25

Sorry Mr. ram chandran. I donot have the soft copy right now. I can reproduce the relevant Para of the OM.
" Regignation from Govt. service, with a view to secure employment in a central public enterprise with proper permission will not entail forefeiture of service for the purpose of retirement/terminal benefits. In such cases the Government servant concerned shall be deemed to have retired from service from such date of such resignation and shall be eligible to receive all retiremental/terminal benefits as admissable under the relevant rules applicable to him in his present organisation."



Expert : PS Dhingra, dcgroup1962@gmail.

Posted On 27 February 2011 at 13:01

Dear Ram Mohan,
The answer to your query lies in the DOPT letter which you have quoted. Naturally, if the previous employer issued NOC, that itself means the employee got due permission from his employer to apply for the Central PSU. Of course the employee can be technically treated to have retired from Government service and would have been eligible for service benefits, but with due regard to the other conditions for his eligibility. The minimum condition for getting gratuity is 5 years and for pension is 10 years. So, the past employer is not obliged to pay anything to the employee towards his gratuity, as his service was less than 5 years in that organization.

BUT, another condition, as per Rule 37 of the CCS (Pension) Rules 1972 is that the employee has the option either to get the prorata pension/gratuity benefits from the last employer or can get his service counted towards retirement benefits of the CPSU. So, if the CPSU has the pension scheme, he must get benefit of his past service to be counted for the purpose of pension and gratuity in that CPSU. Even if the CPSU doesn't have the pension scheme, that would becomes liable to pay the gratuity on his retirement/termination from the CPSU for the total period of his service rendered in the CPSU along with his past service in the Central Government Organization.

PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi-110089
Mobile: 09968076381
[dcgroup1962@gmail.com]



Author : Rama mohan Acharya

Posted On 01 March 2011 at 08:15

Thank you verymuch Mr. Dingra.
In this case the previous emplyer is neither considering the request nor rejecting it since last 6 months. What will be thwe procedure for getting the benefit?


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