Gitesh Patil 12 October 2015

Gratuity applicability u/s payment of gratuity act 1972

Hi,

If an employee serves total tenure of 5 years and 3 months in a Group of Company. Whereas, the employee serves 4 years and 9 months in India (India Payroll) and 6 months in Foreign (Foreign Payroll).

Please suggest whether, employee is eligible to get gratuity under the act or not.

Thanks

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3 Replies

Kumar Doab (FIN) 12 October 2015

You have cited Payment of Gratuity Act,1972 in title of your query, therefore it is believed that thei Act is applicable to the establishment.

AS per the Act if the employee has rendered 4 years and 9 months unintrupted service then he/she should be eligible..........................................If you face any issues on this count come back in the thread.

The Act is silent on location of employee. There should be clear employer-employee relationship.Therefore If the employee has not resigned/separated then the service period from DOJ-LWD shall be counted. If employee was sent abroad on deputation/transfer then transfer/deputation are part of service conditions and period should be counted in service.Usually it is mentioned in appointment letter/corrigendum/service rules/employee handbook that employee can be sent to any location/subsidiary/seconded/deputed/located at any group company/globally etc............................You may check such clauses/T&C.

If the services of employee were billed to foreign entity and employee was paid by the original employer in converted foreign currency then ultimately it is the original employer that is paying in converted currency.......................

Other points to ponder are; Whether employer arranged for any social security benefit , abroad etc........................and if employee signed any additional agreement etc.....................

There are threads at LCI on similar queries that you can search in option to search on right hand side.

It shall be appropriate to show all docs on record to an able Labor Law Consultant/Service Matters Lawyer................

Gitesh Patil 13 October 2015

Thank you very much for your response Kumar,

Just like to add some points:

Whether employer arranged for any social security benefit - YES

If the services of employee were billed to foreign entity and employee was paid by the original employer - NO

The salary have been made through Foreign entity and not Indian entity.

And thats where, I am facing a dilemma. If it would have been a national entity (which PGA 1972 states WHOLE OF INDIA), the gratuity would be applicable. Also, he was having social security benefits.

I have searched different thread, but was not able to find any similar cases.