We having daily wages workers through Labour Contractor since last five year.Please guide us that who is the responsible for gratuity amount of those daily wages worker.
Is it compulsory applicable for Gratuity ?

From India, Pune
If your Contract with the Contract Labour Supplier is in writing, documented, licensed properly by the Principal Employer and the Contractor and followed the Rules & Regulations under The CLRA Act, then CONTRACTOR is responsible.
Otherwise the Contract is called 'sham".
In that case (i.e. sham contract) the labour or labourers to be treated as employee of the Principal Employer. Hence you as Principal Employer needs to pay the Gratuity.
This seems to be a good question and to the best of my knowledge I provided my clarification.
Would expect clarification from I.R. Experts too.
Advance thanks.

From India, Madras
Mr.Sundar has given good answer:
Contract workmen are eligible for gratuity
Principal employer is responsible, primarly, to payment of wages, PF & ESIC contr etc. of contract workmen
In the case of employer-employee relation fails to be established with contractor, principal employer may be liable (Sham Contracts)
Anil Pillai

From India, Jaipur
Dear Friend

Sub: Gratuity payment

Please note that Contract Labour are entitled for gratuity as per the decision of HIGH COURT OF JUDICATURE AT MADRAS DATED: 20.11.2006 The Honourable Mr.Justice P.D.DINAKARAN and The Honourable Mr.Justice P.P.S.JANARTHANA RAJA. in the case of The Management of Cruickshank & Company Ltd.vs The Appellate Authority under Payment of Gratuity Act, 1992and Regional Labour Commissioner (Central), Shastri Bhavan, Chennai.The Court held :

"The entitlement of contract labourers for gratuity cannot be dislodged or denied on account of tussle between the principal employer, who engaged the service of the contract labourers and the contractor, who employed the contract labourers;"

The Court went to further say:

....the gratuity claimed by the claimants herein being a welfare benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act which are included under clause(d) of Section 2(vi) of the Payment of Wages Act within the meaning of wages payable to the contract labourers, it would be the basic responsibility of the petitioner *(ie the Principal Employer ) to make payment of gratuity to the claimants in full or in part as per Section 21(4) of the Contract Labour Act, of course, without prejudice to the right of the petitioner *(ie the Principal Employer ) to recover the same from the third respondent, contractor, even though the initial responsibility to make such payment of gratuity lies with the third respondent, contractor, as the welfare legislations such as

(i) Payment of Wages Act, 1936;
(ii) Contract Labour (Regulation and Abolition) Act, 1970; and
(iii) Payment of Gratuity Act, 1972,

are to be interpreted liberally and in widest possible construction in favour of the labourers, the claimants herein. Therefore, for deciding whether the wages payable to the claimants includes gratuity within the meaning of Contract Labour Act, 1970, whereunder the definition of wages is traceable to the definition of wages in the Payment of Wages Act, 1936 and the centrifugal issue whether the gratuity payable under the Payment of Gratuity Act is protected under Section 2(vi)(d) of the Payment of Wages Act, 1936, in spite of exclusion under sub-clause (6) of Section 2(vi) of the Payment of Wages Act, 1936, we are constrained, as a rule of interpretation, to refer the object and reasons of the legislative intention of all the three statutes, referred to above and the scope and ambit of the provisions contained thereunder and are satisfied that the gratuity being a benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, 1972, is protected within the definition of wages for having included under clause (d) of Section 2(vi) of the Payment of Wages Act, 1936. Therefore, the Court has to give full effect to the legal/statutory fiction and such fiction has to be carried to its logical conclusions, as any other view would only frustrate the legislative intention of all the enactments."....

*Added by us for explanation

By virtue of this Judgment employees of the Contractor deployed at the place of Principal Employer who become entitled for gratuity as per the Payment of Gratuity Act are to be settled gratuity on their severance.In case the Contractor fails to settle it the Employees can make a claim on the Principal Employer who needs to settle it and becomes liable and thereafter recover it from the Contractor.


rajanlawfirm

https://www.citehr.com/285737-legal-...ndustry-2.html

From India, Madras
True that Contract Labour are entitled for Gratuity but i would like to add my view to it.

Please see that for being eligible for gratuity you need to have 5 years of continuous service. Here we are talking about the daily wagers. The daily wager is the one whose employment starts with the day and ends with the day.

Now my Concerns are below.

1. We have to see if the so called daily wager was being provided salary monthly or weekly or daily.
2. What are their employment status with the Contractor. Whether they are his permanent employees or he has engaged them specifically for the contract or they are employed on principal to principal bases with the contractor itself.

it is true that while dealing with the beneficial legislation we have to give the widest possible interpretation but it is equally true that you must complete the minimum eligibility possible to get any benefit available under any Act or Legislation.

if those workers are daily wagers and are paid daily for their work they will not be considered for gratuity whether no matters how long they have worked for you.

But if they are paid monthly either cash or on vouchers and they have worked for 240 days in every year of their service with you, of-course must have not worked anywhere else during that period so in such a case they will be eligible for gratuity.

Open for further discussion.

From India, New Delhi
If the daily wagers are working for 5 years, it means its a perennial nature of work. In view of the judgement cited, the balance tilts in favour of workmen being a beneficial legislation, however the contractor has to bear the liablity since the Payment of Gratuity Act is an establishment based enactment.
From India, Pune
Dear Mr. Chaudari,

I think more clarifications have been given to your question. Now it your time to come back and say whether your Contract with the Contract Labour is a legal one ( NOT A SHAM CONTRACT ).

Again if it is a sham contract and the same employee (under the banner "Contract Labour") worked in your premises all liability is automatically yours including the Gratuity.

hence it is time you have to come back and confirm you have understood the subject, because I do not think any more clarification / confirmation is required which has been duly provided by Rajan Law firm, Mr. Kamal Kant Tyagi.

Look forward to your coming back please. ADvance thanks,

Sundararaman

PS:

In general, in this Cite HR Forum people initiate the question, seeking clarifications. Once the same is provided the person who sought the answer does not come back.

Hence I request all Cite HR Members - whenever a clarification or confirmation is sought and once you got clarified / confirmed on the subject, please do come back and close it. That will give satisfaction for those who take interest (lot of interest) in providing clarification / confirmation. Hope Members will follow this request from now onwards.

From India, Madras
Dear Sir,
I would like add one more dimension to the querry. -- Say a contract labour works for 5 YRS in the establishment of Principal employer in which contractor changed every year. Who will pay gratuity -- Last contractor, each
contractors for their tenure or Principal employer.
In my view -- Payment to be made by Principal employer out of a fund created by recovery of proportionate amount towards gratuity from bill payable to contractors.
Please comment keeping statute & practicality in mind.

From India, Patna
Same position -Principal Employer is the same - Contractors are changed to avoid permanency claims -But employees of the Contractor deployed at the place of Principal Employer who become entitled for gratuity as per the Payment of Gratuity Act are to be settled gratuity on their severance.In case the Contractor fails to settle it the Employees can make a claim on the Principal Employer who needs to settle it and becomes liable and thereafter recover it from the Contractor.

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