Denis Gonsalves 03 November 2023

Regarding gratuity previous 5 year & current 5 years

Dear Sir/Madam,

Greetings!

I worked in a company for five years, from 2011 to 2016. Every two years, they renew their employee contracts and give a new contract to their sister company, so I don't know about the gratuity. Earlier, I was not paid a gratuity by my company. I have a 5-year experience letter from my main company. Three years later, I rejoined and continued with the same company, completing my five-year tenure in February 2024. If I leave this company, I should get gratuity for last five years and current five years . I would appreciate your advice.

Kindly advise

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Quick Summary

This discussion addresses an employee's concern about gratuity entitlement after multiple contract renewals with the same company. The employee worked for five years (2011-2016), then rejoined and completed another five years until February 2024. The advice suggests that if there was no actual break in service, the employee is likely entitled to gratuity for their entire tenure, as contract renewals to avoid statutory benefits like gratuity are often considered a sham. The Payment of Gratuity Act, 2018, which covers private sector employees with at least five years of continuous service, is highlighted as relevant.

3 Replies

P. Venu (Advocate) 03 November 2023

You are entitled for gratuity, the reemployment being just a sham.

More more informed discussion, you may post the query at citehr.com

Dr. J C Vashista (Advocate ) 04 November 2023

You are a contractual employee for specific time,

However, Payment of Gratutity Act, 2018 covers private sector employees as well which is:

This amendment has aimed to ensure harmony amongst employees in the private sector and in Public Sector Undertakings/ Autonomous Organizations under the Government who are not covered under CCS (Pension) Rules.

These employees will be entitled to receive higher amount of gratuity at par with their counterparts in the Government sector. An employee is entitled to receive gratuity if he has rendered continuous service for at least five years with an organization and usually given at the time of retirement under certain terms and conditions.

This gratuity is payable to the employee on his superannuation, or on his retirement or resignation or in case of Death or Disablement caused due to accident or disease.

Ritesh Maity (Labour Law Advocate) 23 November 2023

It appears that your contract was renewed from time to time (which is a very common practice by the management) only to deprive you from having a continuity of service and getting all statutory benefits including gratuity. This is nothing but a sham contract and only a paper arrangment and is void. The benefit of labour laws will go in favour of the employee. If there is no actual break in service then you are entitled to gratuity for your entire tenure irrspective of whether contractors were changed or not. Even principal employer may be held liable for payment of such statutory compliance.