Harsh Kumar Mehta
Consultant In Labour Laws/hr
Apex Management
Labour Laws Consultants
Korgaonkar K A
+2 Others

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On pay roll their are 8 ee’s and also their are 6 nos. of contract labours, then Gratuity Act is applicable or not
From India, Nagpur
Dear Jayeshkumathekar,
You are requested to read the definition of employee as defined in S 2 (e) of POG Act which is given as under:
"Employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity....
This definition does not include employees engaged indirectly i.e. through contractors. Therefore, the provisions of POG Act does not apply to you.

From India, Mumbai
Dear Jayeshkumar
section 1(3)(b) PGAct applies to every shop or establishment in which 10 or more persons are employed or were employed , on any day of the preceding twelve months. Therefore the PG Act is applicable to your establishment.
with regards and thanks
RL Dhingra , Advocate,
Labour Law Consultant ,Delhi
9818309937 Email:[email protected]

From India, Delhi
Dear jayesh, The provisions of Payment of Gratuity Act are applicable to your establishment. P K Sharma
From India, Delhi
Advocate Dhingra ji & Sharma ji,
Thank you very much for your participation in this thread and responding in contradiction to my views.
With due respect to you both, may I know on what ground you feel that the POG Act applies to queriest?
I have given a ground for the views expressed my me. I do not claim that my views are correct. But, question comes in my mind, how the learned members like (Sarvashri) Harsh Kumar, Paradkar & Varghese are making mistake by appreciating my answer?

From India, Mumbai
Dear Kargaonkar ji

Mr jayeshkumathekar in his query stated that On pay roll their are 8 ees and also their are 6 nos. of contract labours, then Gratuity Act is applicable or not?

The POG Act applies to establishment in which ten or more persons are employed or were employed, on any one day of the preceding 12 months. It does not make any difference whether employees directly employed or through contractor , only condition is 10 employees on any day of the preceding 12 months.

Although the liability for payment of Gratuity is that of the contractor but by virtue of section 21(4) of CL(R&A)Act 1970 , te principal employer can be direted to to make the payment of gratuity to the employees of the contractor who can recover the same from the contractor ( Madras Fertilize Ltd vs Controllng Authority under Payment of Gratuity Act ,2003 LLR 244 (Mad HC)

It is in the above context I stated that the Act applies.

Hope yoyr doubts are clear. More on next time .

Thanks and regards

RL Dhingra Advocate

Labour Law Consultant,Delhi

09818309937 E-mail:rld_498Rediffmail.com

From India, Delhi

1. The member who initiated this thread has not mentioned whether the unit to which he has referred is a "factory, mine" etc. as mentioned in section 3(a) of the Payment of Gratuity Act, 1972. If the said unit is such which is manufacturing unit and by adding 6 contractor employees, the strength of workmen becomes more than 10, hence may be called as factory and thus, in my opinion, the provisions of said Gratuity Act are applicable. As per provisions of the Factories Act, 1948 workmen engaged through contractors are also to be counted while counting 10 or more workmen.

2. Further if the unit to which the initiator of this thread has referred is "shop or establishment" as mentioned in section 3(b) of said Gratuity Act, even then the number of persons working becomes 6+6=12 and hence is coverable under the Payment of Gratuity Act, 1972. I am doubtful if any body can legally contest that the term "persons" does not include 6 persons engaged through contractors. In other labour laws also viz.-Employees Prov. Fund & Misc. Provisions Act, 1952 (section 3(a) and ESI Act, 1948 (section 2(12) etc. the term "persons" has been used. Thus, making the coverage of all such statues very wide i.e. the persons engaged temporarily, casual, adhoc or also through contractors are also to be counted for making it 10 or more.

3. Therefore, in my opinion, the contractor of 6 contractor employees (if other condition of eligibility for gratuity are fulfilled as per Gratuity Act) is responsible for discharging his duties for payment of gratuity to the contractor employees as per provisions of said Gratuity Act. Otherwise, as per provisions of Section 3 of the Payment of Wages Act, 1936 ,the principal employer is responsible for payment of gratuity to said contractor employee( as any sum which by reason of the termination of employment of the person employed) (section 2(vi) of said pPayment of Wages Act, 1936. It is another aspect whether later on the principal employer will be in a position to recover the amounts from contractor or not.

4. I could not trace out any judgement of hon'ble Supreme Court on this specific issue, but in a case titled- Mettur Thermal Power Station -vs- Appellate Authority, the Hon'ble Madras High Court in its 2012 year judgment has decided the issue in favour of person who had worked through contractor before his regularisation in the said concern. Copy of said judgment is enclosed as an attachment.

5. Perhaps seniors/experts will see my above views and point out if there are any lapses at my level.

From India, Noida

Attached Files
File Type: pdf Madras High Court Judgment 2012 Mettur Thermal Power Station -vs- Appellate Authority.pdf (134.0 KB, 96 views)

Dear Harsh Kumar ji,
Thank you for your post. With due respect to you Sir, my submission to your above quote is as under:
Whether the unit falls under factory or under mine or S&E or under railway Administration is not an issue. Everywhere once you cross the employee limit of 10, POG Act is applicable. The term "employee" is defined in the POG Act, which is relevant here and not the term "employee" defined in any other Law. I have given the definition of "employee" in my post. This definition does not include contract employees. Therefore, in my view the provisions of POG Act does not apply to the unit under question.

From India, Mumbai
Dear Harsh Kumar ji,
This is in continuation to my earlier post.
Even though H'ble SC given a judgement in favour of contract employee, in my view it shall not become criteria for applicability of Act by which contract labours shall be counted while computing number of employees required for applicability of Act.

From India, Mumbai
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