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Hi Folks

I need your suggestion on this issue

We are in Construction line, the nature of operation requires working on Sundays also. We have employed more than 1000 Casual Employees (Employed through a contractor)

The issue

Case One

The casual labour worked with us through contractor, for 4 almost 4.5 years, whether he is eligible for gratuity, in case the contractor fails to pay the grautity, whether we need to pay the same as Prinicipal employer
All thorugh this years , he had worked for us under the same contractor

Case Two

The casual labour worked with us through 2 contractors with 1st contractor for 2.5 years and with the second for 4 almost 2.5 years, whether he is eligible for gratuity, in case the contractor fails to pay the grautity, whether we need to pay the same as Prinicipal employer
All thorugh this years , he had worked for us as a Casual labour

In both the cases as the nature of work requires, both the employees have worked for 240 days every year

your valuable views pls

R Sudhakar

From India, Madras
Dear Sudhakar

Case 1

It is not clear whether the employee has worked for 4 years or 4.5 years or 5 years.

For initial eligibility he must have completed 5 years.

If an employee has completed 240 days of work in all five years, he is eligible. We need to examine the facts carefully. But to make it simple, I would advise you to examine whether all these employees have completed 4 years and 6 months of service. Those organisations with 5 days of work, 4 years and 6 months will make an employee eligible

If it is 4 years, then the employee will not be eligible to get gratuity. If it is more than 4 years and six months, then examine the facts carefully.

The contractor is liavble to pay. However, if he fails to make the payment, Pricipal employer needs to make the payment and take necessary steps to recover from the contractor.

Rfer Madras Fertilisers vs Controlling Authority under Payment of Gratuity and others 2003(I) LLJ 854 (Madras High Court)

Case 2

Working under two different contractors will have to be examined. Please examine whether there has been any break in service in terms of nature of job, your terms with the contractor etc. Forv example if you have specifies to the new contractor that they shall engage these workmen, then there is definite continuity of service. If the contract has expired,and a new contract has been awarded, then there is no continuity of service. Again, I am not very clear about they being engaged as casual labour with you all through. These two employments are different casual worker is your direct employee but a contract workman is not your direct employee. If they are engaged as Casual worker and you are using the Contractor for namesake, and if it is prooved in the court, then you need to make the payment and you will not have a right to claim it from the Contractor

I have given broad guidelines and to give exact and foolproof lkegal opiniuon more facts need to be examined

In a nutshell

1. If a contract workman has completed 4 years and 6 months he may be eligible for gratuity

2. If he does not receive the payment from the Contractor, then as Principal employer, you are liable to make the payment.

3. After making the payment, you have a right to claim from the Contractor

4. Employment under two different contractors need to be examined carefully with reference to continuos service or break in service


From India, Chennai
Hi Team,
I need your suggestion on this issue.
Employee worked on daily wage for 3 to 4 years of his services before regularized. He was retrenched from service after fifteen years since the company is in loss condition. Management paid retrenchment compensation, Gratuity and other terminal benefits to him from the date of regularization of his service. He filed a case that the management has no paid retrenchment compensation from his date of joining and paid only from date of regularization. Management content is since he worked on daily wage and not worked 240 working days in a year he is not entitled for retrenchment compensation for daily wage period. Burden of proof lien on workman. In this situation the labor court can direct the management the retrenchment is illegal and pay compensation for daily wage period? Further the workman withdrew the compensation amount, applied for settlement of provident fund and for reduced pension. What management has follow in this regards?
Please guide with your valuable suggestion.
Thanks & Regards,
G.B. Anjaneya Reddy

From India, Tadepalligudem
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