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K V Aravindakshan (Manager (Internal Audit))     14 January 2011

Gratuity Elegibility

Gratuity elegibility

Mr. John joined in a company under the Kerala state public sector during September 1979 and continued the service upto 28/02/2009. As per rules of the company the retirement age is 58 years and his retirement date on attaining the age of 58 was on 31/03/2009. On 1st March-2009 he was appointed in another state PSU under the Govt. of Kerala on deputation. From 1/4/2009 he was appointed in the same company as chief technical officer on contract basis without any break in service. On attaining the age of 58 the previous employer paid an amount of Rs. 3.5 lakhs as gratuity. His contract period with the present employer is upto 31/03/2011.
With effect from 26/05/2010 the gratuity ceiling has been enhanced to Rs. 10 lakhs. The question is  whether he is eligible for enhanced gratuity of Rs. 10 lakhs since his service is continuous from September 1979 to March 2011.
As per section 2 r of Gratuity act "superannuation", in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service at the age on the attainment of which the employee shall vacate the employment. since this clause is applicable in his case, can he claim for the enhanced gratuity amount? If so who is liable to pay the same his previous employer or his present employer. If they are not admitting the fact to whom he should contact for the same. Both the employers are following the gratuity act.
Request to give a legal advice for the above.



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 3 Replies

Sarjooram Sharma (Assistant Labour commissioner)     14 January 2011

Mr, John's Services were ended on 1-3-2009. Further extension was on contractual basis which is different mode of service. This can not amount continuous services after 28-2-2009. So Mr. John is entitled for the gratuity which was applicabe on 1-3-2009.
1 Like

K V Aravindakshan (Manager (Internal Audit))     15 January 2011

Thank you Sri Sarjooram Sharma. Similar another case was, in a PSU an employee was redesignated as Executive Director before his retirement and extended the service until further orders. He is continuing the service since 31st December 2009 which was his retirement date. Is he elegible for enhanced gratuity on termination of his service ?

Kirti Kar Tripathi (lawyer)     15 January 2011

I completely disagree with Mr. Sharma. The Act does not mention any where that employment rendered in the extended period will not be counted for the purpose of continuous services. The section 2A of the Payment of Gratuity Act runs as under:-

 

 

Section: 2A
Continuous service.

For the purposes of this Act, -

(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order [***] treating the absence as break in service has been passed in accordance with the standing order, rules or regulations governing the employees of the establishment), lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.

(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer -

(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than -

(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) two hundred and forty days, in any other case;

(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than -

(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) one hundred and twenty days, in any other case;

Explanation: For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which -

(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicab1c to the establishment;

(ii) he has been on leave with full wages, earned in the previous year;

(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment and

(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.

(3) where an employee employed in a seasonal establishment, is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during such period.

When the services of employee did not interrupt or he has been given new appointment after clearing all his terminal dues on account of his superannuation or termination of service, the employee is entitled for gratuity for the entire period of his employment, which include his extended period of employment.  Thus in the present case, he is entitled for the benefit of new amendment under the law. only because, he was sent on deputation will not amount the new contract of service.


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