Will employees get gratuity if the employer sells his company to another company?
As per the Gratuity Act, an employee is not eligible to receive gratuity if they resign before completing 5 years. But what will happen to the employees if the employer sells his company?
Will an employee get gratuity if he completes 4 years and 8 months?
From India, Madras
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As per the Gratuity Act, an employee is not eligible to receive gratuity if they resign before completing 5 years. But what will happen to the employees if the employer sells his company?
Will an employee get gratuity if he completes 4 years and 8 months?
From India, Madras
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When a company is sold to another company, Section 25FFF of the Industrial Disputes Act is applicable. Accordingly, the employees are expected to be paid compensation at the rate of 15 days' salary for every completed year of service as retrenchment compensation. If the service of the employees is also transferred, then there should be a consensus on the following points:
1. Past service of employees - whether their service will have an effect from the date of joining in the past/old company. If so, whether provision has been made for the payment of gratuity by the new company.
2. Service conditions - whether the salary, benefits, and other service conditions would remain unchanged or not.
If the above terms are clear, there would not be any doubt about the payment of gratuity. If no such liability is taken over by the new company, then arrangements should have been made to pay the compensation and gratuity to those eligible for the same. Though all employees who have worked at least for 240 days in the preceding 12 months will be getting retrenchment compensation at the rate of 15 days' salary for every completed year of service along with notice pay of one month's salary (or notice in advance), only those who have worked for 5 years will be getting gratuity. However, in some states, like in Tamil Nadu, following a High Court verdict, an employee who had worked for 4 years and 240 days in the fifth year is also allowed gratuity.
Regards,
Madhu.T.K
From India, Kannur
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45271. Past service of employees - whether their service will have an effect from the date of joining in the past/old company. If so, whether provision has been made for the payment of gratuity by the new company.
2. Service conditions - whether the salary, benefits, and other service conditions would remain unchanged or not.
If the above terms are clear, there would not be any doubt about the payment of gratuity. If no such liability is taken over by the new company, then arrangements should have been made to pay the compensation and gratuity to those eligible for the same. Though all employees who have worked at least for 240 days in the preceding 12 months will be getting retrenchment compensation at the rate of 15 days' salary for every completed year of service along with notice pay of one month's salary (or notice in advance), only those who have worked for 5 years will be getting gratuity. However, in some states, like in Tamil Nadu, following a High Court verdict, an employee who had worked for 4 years and 240 days in the fifth year is also allowed gratuity.
Regards,
Madhu.T.K
From India, Kannur
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Gratuity Act-Teachers-Ma dhya Pradesh.docx