Gratuity act

TS Bhatia (Querist) 28 May 2008 This query is : Resolved
Sir,
I shall like to know if a contractor worker completes 5 years of continous service,who is liable to pay gratuity to the worker ?
Is it the responsibility of contractor or principal employer ?

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Prakash Yedhula (Expert) 28 May 2008
Under Sec. 21 of the Contract Labour (Regulation and Abolition) Act 1970, the principal Employer is liable to pay only wages to the Contractor's employees if the Contractor fails to do so and to recover such amounts from the Contractor.

Under the same Sec. 21 of the act, a Kerala High Court case is also cited wherein the High Court has held that Bonus and Gratuity are NOT included in Wages for the purpose of this act.

H. S. Thukral (Expert) 28 May 2008
Dear Mr. Prakash
In the case of Madras Fertilisers Limited
v Controlling Authority Under Payment of Gratuity Act and Others
2003 (1) LLJ 854, Madras High Court ordered the petitioner i.e. Principal employer to pay gratuity to the respondent workmen of contractor and recover the same from the contractor.

Guest (Expert) 29 May 2008

Section 21
1).............
2) Every application for the grant of a lience shall be accompanied by a certificate by the principal employer in Form V to the effect that the applicant has been employed by him as a contractor in relation to his establishment and that he undertakes to be bound by all the provisions of the Act and the rules made thereunder in so far as the provisions are applicable to him as principal employer in respect of the employment of contract labour by the applicant.

The Contractor undertakes vide Form V, to take the responsibilities of the Principal employer, therefore the contractor is liable. Madras High Court has also finally held that the discharge should from the contractor.

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