Gratuity Applicability To Contract Labour Working Under Same Contractor But In Different Establishment - CiteHR
Korgaonkar K A
+1 Other

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Dear All,
If a contract labour works continuously for 3 years under ABC Contractor in one factory and for further 3 years in another factory(different Pricipal Employer) under the same Contractor, then my question is can he claim gratuity if he leave the services of that contractor?
awaiting for reply,

Dear Parag ji,
First thing, gratuity is payable on completion of 5 years if service, except in case of death. So the question of payment of gratuity on 3 years continuous work does not arise.
To pay the gratuity,It is the duty and liability of employer who employ a person directly. Principal Employer is not liable to pay gratuity to a person who is employed by his contractor.

Keshav Sir,
I think you did not understand my query. Let me clear it. The contract labour worked for total 6 years under one contractor but in two different principal employer's establishment. The contractor took work contract for 3 years in one establishment & then for further 3 years in different establishment.
I hope this will clear the things.
Kindly suggest me the solution.

Dear Parag ji,

As per Section 1 (3) of POG Act, the POG Act is applicable to:

(a) every factory, mine, oilfield, plantation, port and railway company;

(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

The contractor or the contracting company is an establishment with in the meaning of law, with out any doubt in my mind. Therefore the contractor is liable to pay Gratuity to his employees who are completing 5 years and more continuous service with him. Such employees may work for single PE or multiple, it is the duty / liability of contractor only to make the POG to his employees.

Dear Keasav,
Contractor is liable to pay the gratuity amount to the Contract workmen for his continuous servcice of 5 years irespective of he workes in different priniciple employer establishment under the same contractor.
Principle employer is also liable to pay the gratuity in the absence of contractor paying the GA.
D Pannerselvam

Dear D Pannerselvam ji,
You must be refering to recent judgement in Mettur Thermal Power case of Madras High Court in which court held that even the contractor liability to pay gratuity can be fastened on the principal employer. Hence, even assuming that the service rendered by the employee is through a contractor, in the absence of contractor paying gratuity for a particular period, the workman is eligible to get gratuity from the principal employer. (LLR Mad. HC 374 ).
This judgement is not binding to other States.
Thanks for reminding me of this case.

employee yesterday reports for duty and today he expires whether he eligible for gratuity? if yes, provide calculation of days.
Dear hr colleagues,
can u clarify my quarry, that
if an employee reports for duty yesterday and dies today then what is the status of gratuity?whether he is eligible for gratuity? if yes how much? how to calculate?

Dear Sandeep ji,
The nominee / legal heir is entitle for gratuity as per section 4(c) of POG Act.
Now the question is, how much?
According to Act, gratuity is payable @ 15 days salary for every year completed. 6 months & above consider 1 year else ignore. In this case, as per law, gratuity calculation is NIL.
However, if the employer has a GGA by any of the insurance companies and the employer is paying extra premium for life of employees, the legal heir is entitled for gratuity. This amount will be calculated for the remaining sevice of deceased. The rate of salary would be taken as of date of retirement on the basis of considering avarage inflation.

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