Sanjay_n Started The Discussion:
We have situation where a employee working with us for last 11yrs 8 months resigned while he was working for our UK comany. He is from our India company and currently in UK as part of internal company transfer since last 18 months.
As per policy we don't pay gratuity for employees who resign at onsite locations. Is this legal? Or is it not relevant where this employee resigns as he was working for Company we have to pay him the Gratuity?
it does not make any difference whether the employee is working onsite or offsite, or whether working in India or abroad. only important thing is that he is defined as your employee and gratuity benefits shall verily be legitimate to be paid to the employee
thanks and regards
Do you have any Final Payment Policy for employees who resign at onsite location ??
Or, they are just allowed to go without any payments from the company; (for outstanding salary, leave salary etc.); on the presumption that "since they themselves have made a choice for a better future and career prospect, why should the company pay them anything at all !!"
Your second post of clarification; does it imply your company's policy that "since he has been transferred to the UK company; it is not our headache whether he gets any payment or not. Moreover Payment of Gratuity Act is an Indian Act, so how does it apply in U.K., Right ?"
From your posts, it is difficult to infer anything else than what is stated above; however; do enlighten us on your company policy.
Gratuity is payable for the past service under the Payment of Gratuity Act, if he has completed the qualifying service (four years and eight months) for the same. it does not matter if an employee resigns to join the new assignment (whether on site/off site, in India or abroad). It is a statutory liability of the employer to provide for the gratuity payment to its employees, on accrual basis or on actual basis, in the books of its Accounts. This expenditure is allowable expenditure but taxable at the hands of employees.
An employer cannot escape the payment of gratuity to eligible employees, under the Payment of Gratuity Act.
Ours is large IT company. There are very few such cases. For business purpose we have employee travelling and working out of UK/US etc. All these employees are logically part of same umbrella company. When they are on deputation to onsite they have local holiday and other benefits. Even though we discount his onsite duration he crosses 5yrs on Indian Payroll.
You have to clarify the following
1. Was the employee on the rolls of your company in India?
2. Was he transferred or seconded (handed over to UK).
In any case in my opinion if he has been transferred and was on your rolls then you need to pay Gratuity till his date of resignation.
However, if he has been seconded then you need to compute Gratuity till he served with you and pay him.
In simple terms if you had paid salary till he resigned then Gratuity is payable till his date of exit, if salary is paid by UK then till he served in India, gratuity is payable.
You may also come across a situation wherein the UK company will be paying the salary but will claim as a reimbursement from the Indian Company. Even in such case in my opinion Gratuity is payable till his date of exit.
Trust the matter is clear
Dear Sanjay and all others
Let this be clear as HR Persons:
1. Gratuity is payable on completion of 5 years
2. It is an act/rule and not company policy
3. As one of the respondent has answered, whether the person is employed by Indian company or otherwise is all matters. If appointed by Indian company, whether he works in India or abroad, he need to be paid Gratuity
4. As one more respondent has answered, if the person is appointed by Indian company, but working in a foreign country and taking salary there and reimbursed by Indian company, even then also the gratutiy is payable
5. Only if the person has resigned and has been taken-in as a fresh employee in their foregin company, if the person is eligible for gratuity till his date of resignation and if he has completed 5 years, he is eligible for gratuity
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