I have a query regarding gratuity. If the management of any organization changes, who is responsible for payment of gratuity to the employee - the old management or new management? Can the old management clear all the dues of gratuity of the employees before the process of transfer to new management is done? Do the employees have any legal rights to get the gratuity from the old management before or after the process of transfer.
From India, Pune
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6From India, Pune
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By the change of ownership, the relationship between employer and employees subsists, and the new employer cannot escape from the liability of payment of gratuity to the employees. This was held by the honorable High Court of Kerala in Pattathurila K. Damodaran v V.M. Kassim Kanju [1993 (1) LLJ. 1211].
Understanding the Principle
To understand the principle behind this reasoning, it is better to refer to Section 25FF of the Industrial Disputes Act, 1947, which deals with the effect of the transfer of management of the establishment from the existing employer to another on the service of the existing employees. Section 25FF clearly lays down that when the management of an existing establishment changes either by agreement or operation of law, every employee with continuous service of not less than one year in the establishment before transfer is entitled to notice and compensation in accordance with the provisions of Section 25F as if he/she is retrenched. However, this is not applicable subject to the following three conditions: (a) when the services of the employees stand uninterrupted because of the transfer, (b) the service conditions do not become less favorable after the transfer, and (c) whether under the terms of transfer or otherwise, the new employer is liable to pay retrenchment compensation to the workmen in the event of retrenchment on the basis of the entire uninterrupted service. It is like the analogy of a ship - the sailors may change, but the ship remains the same and goes on.
Therefore, any employee remaining in the service of the establishment after the change or transfer of its management is legally entitled to stake the claim for gratuity only against the new management in the event of the termination of his employment.
From India, Salem
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Understanding the Principle
To understand the principle behind this reasoning, it is better to refer to Section 25FF of the Industrial Disputes Act, 1947, which deals with the effect of the transfer of management of the establishment from the existing employer to another on the service of the existing employees. Section 25FF clearly lays down that when the management of an existing establishment changes either by agreement or operation of law, every employee with continuous service of not less than one year in the establishment before transfer is entitled to notice and compensation in accordance with the provisions of Section 25F as if he/she is retrenched. However, this is not applicable subject to the following three conditions: (a) when the services of the employees stand uninterrupted because of the transfer, (b) the service conditions do not become less favorable after the transfer, and (c) whether under the terms of transfer or otherwise, the new employer is liable to pay retrenchment compensation to the workmen in the event of retrenchment on the basis of the entire uninterrupted service. It is like the analogy of a ship - the sailors may change, but the ship remains the same and goes on.
Therefore, any employee remaining in the service of the establishment after the change or transfer of its management is legally entitled to stake the claim for gratuity only against the new management in the event of the termination of his employment.
From India, Salem
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Dear Rajan, No; you can’t since the transfer is over and your services are continued under the new management.
From India, Salem
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From India, Salem
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If the previous management has not paid the share of gratuity then can the employee take any legal action against them? If yes, then can you provide me the references for the same? Thanks.
From India, Pune
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From India, Pune
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Change Management.ppt