Swati (HR Executive) 23 September 2013

Severance and gratuity eligibility

My husband works in a 5 day work IT company and now the company is getting sold out but the company was not sure of the deal and has given a severance letter to all deserving employees. Severence is given prorated. - 1 month for each completed year and prorated for the last year. His last was given October 2013 but a notice had to be served till Jan 2014. Now the companu got sold and in all possibilites will give the F&F to employees by end Sept(closing soon) Is he eligible for a tax-free gratuity? What will be his working day? Condition 1: 4years and 10.26 days considering Jan'14 as last worked as per the severance letter. Condition 2: What will be his last working day since they will get F&F by Sept the also he woul have completed 4 days shot of 7 months.

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Kumar Doab (FIN) 24 September 2013

From your post it is felt that the last company is adhering to the provisions as in Statue/Standing Orders/appointment letter-contract of employment……………….

If the employee pursues the matter the company would clarify its stand on Gratuity as well.

If the date of retirement is known the employee can submit FormI one month before date of retirement.

If the company is initiating separation it should submit notice on calculation of gratuity to employee with a copy to Controlling Authority of Gratuity.

You may build your case from facts and documents on record and should show all docs in person preferably, to a competent and experienced labor consultant/service lawyer.

The lawyer that has seen all of your docs can advise you the best.

There seems to be some confusion in month/year mentioned by you.

Jan2014 comes after Sep2013.

If the employee serves up to Jan2014 the tenure of service shall be certainly more than if he serves till 2013.

You have posted that:

------“My husband works in a 5 day work IT company ”

The Payment of Gratuity Act 1972:

Section: 2A: Continuous service: 2 (a) (i)

(Thus If employee has worked for 190 days in 5th year you should be eligible)

From DOJ calculate 1Y e.g; 1^st Jan to 31^st Dec………………thus 4Y.

In 5^th year calculate 190 days since the establishment is working on 5 days/week……………………

These days should include all holidays/off days/approved leave………………….

-------“His last was given October 2013 but a notice had to be served till Jan 2014.”

The employee must press to serve full notice period as given to him.

“he woul have completed 4 days shot of 7 months.”

Since the establishment works on 5days/week he should be eligible.

--------“now the company is getting sold out”

The agreements pertaining to sale should be looked into, and all employees should take up the matter vigorously with last employer and new employer and must obtain clarity from them in writing. All employees should join hands, unite and jointly approach a competent and experienced labor consultant/service lawyer, and be clear on their rights, BEFORE THEY SIGN THEIR ACCEPTANCE OF FNF STATEMENT/SETTLEMENT.

TRADE UNION MAY ALSO BE APPROACHED.

CA/Company Secretary/Corporate lawyer can also be consulted.

It is sale of flock, stock, and barrel to the new company.

Is it a “Merger”? From your post it appears that it may not be a merger.

However The agreements pertaining to sale should be looked into………………………by your lawyer.

Is the service of the employees also getting transferred with DOJ as in the last company and accordingly has the new company made arrangements for the payment of gratuity to such transferred employees?

Would there be any change in service conditions of the transferred employees?

If the new company is not taking any liability for such transferred employees the last company shall have to make the arrangement for payment of Gratuity to ELIGIBLE EMPLOYEES those who are eligible as per the provisions of statue: The Payment of Gratuity Act 1972.

If the new company taking such liability there should be no doubt for payment of Gratuity to the employees as their tenure of service would be counted from DOJ as in last company to DOL in new company.