Worked on yearly contract signing an agreement of service for the period one year every time. Signed so far 6 agreements without a loss of a single day and hence worked continuously for 6 years. Do I can be treated as "Employee" for Gratuity and signing the contract every year will deprive me from the Gratuity? The HR is denying me the Gratuity stating that since I have signed the contract every year I am not eligible for Gratuity.
Please advice.

From India, Mumbai

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Dear Deepa,

Yes; certainly, you are eligible to gratuity since you have completed more than 5 years of continuous service under the same employer despite the fixed term contract between the same employer and yourself for every year. Unfortunately many of the modern HR fraternity form such erroneous views in respect of statutory claims only by taking cues from the employers with exploitative tendencies and rake their brains up in formulating such contracts to circumvent the benefecial provisions of some Labour Law or the other. Better you could have given the extract of the contracts. If the fixed term contract of service was only for a limited period of one year and strictly not renwable thereafter, how it was renewed continuously for successive six years without a break of even a single day? Continuity of service or continuous service is a fact to be determined on the basis of subsisting substantial employment relationship of employer and employee without any break over any particular stretch of period from the beginning to the end. If the contention of your HR is accepted, tomorrow every employer can enter into an annual fixed term contract of service with every employee he employs and say the contract will prevail over the provisions of the Payment of Gratuity Act,1972 and disentitle the claim for gratuity since he/she signed the contract every year.

Send notice to the employer for gratuity if you are not in service after the expiry of the last contract and if it is of no use, file a claim before the Controlling Authority under the Act for the area.

From India, Salem
Dear Mr. Umakanthan.M sir,

Thanks a lot for your insight on the subject. Every contract signed was for the period of one year(i.e. from 12/07/2010 to 11/07/2011, 12/072011 to 11/07/2012, 12/07/2012 to 11/07/2013, 12/07/2013 to 11/07/2014, 12/07/2014 to 11/07/2015 and the final agreement was from 12/07/2015 to 11/07/2016). Every year a new agreement was signed with a change in remuneration / Honorarium only keeping all the terms and conditions same. There was no mention on payment of gratuity in any of the agreement. The agreement can be terminated by giving one month notice by either party.It also says that "The said contract stands terminated on its expiry unless renewed". After the final agreement the HR has informed me that hereafter no new agreement will be done and my services is not required. I was following the attendance etc rules and regulations of the company, was getting 28 days leave , member of employees group insurance scheme along with agreed monthly remuneration. I was not signing any invoice for my services rendered . On my full and final settlement receipt for the last 11 days period(from 01/07/2016 to 11/07/2016) the Date of Joining is stated as 12/07/2010 and date of Leaving as 11/07/2016. If you permit me I will call you and if I get your email ID over the phone, I can email you my contract copy for your further advice.

Thanks a lot again and my sincere apology for disturbing you.


Deepak Nayak 9867681715 , 8291097149

From India, Mumbai
Dear Mr. Umakanthan.M sir,
in one of the term of the contract it is stated as
"This agreement takes effect in substitution for any previous agreement or agreement whether written, oral or implied between the company and Deputy General Manager - IT relating to the services of Deputy General Manager - IT and any such agreement of arrangement shall be deemed to have been terminated by mutual consent as from the date hereof."
Does this agreed term have any implication on the eligibility criteria? Please advice
Thanks and regards

From India, Mumbai
Mr. Deepak,
I fully agree to the comments of Shri Umakanthan ji which are absolutely correct in the light of your detailed note. You are eligible for the payment of Gratuity for which you have to approach your employer and the Controlling Authority under the Payment of Gratuity Act, 1972 by filing your application in form "I".
P K Sharma

From India, Delhi
Dear Mr. Umakanthan.M sir, As required I had given the extracts of my agreement for your review. Please help. Regards
From India, Mumbai

Attached Files (Download Requires Membership)
File Type: txt Agreement Extracts.txt (1.8 KB, 123 views)

Well, Deepak, such saving clauses in the contract of fixed term employment have been purposively included only to baffle the readers. What's important is whether the employee is eligible and entitled to gratuity on termination of his employment as per the contract of employment. If the answer is "YES", such baffling clauses pale into insignificance when the ocassion for gratuity arises. The factum of employment revolves around three basic ingredients viz., the employer, the employee and the contract of employment. Once the contract between the parties is established as a contract of service and not a contract for service, the benefits flowing out of the contract become unabatable unless the enabling conditions are absent. So, I reiterate my earlier points. Pl, go ahead with the formal claim for gratuity.
From India, Salem
Dear Sir,
Thanks a lot for your help. My sincere apology for bothering you. I am confused and before approaching the commissioning authority, I need your further help. In my agreement. along with all other clauses pertaining to the remuneration, working hours, leave entitlement etc, the following two clauses are included. Please tell me whether it is a Contract of Service or Contract for Service and whether I can claim the gratuity.
"And whereas the company has decided to appoint Mr.Deepak Nayak as DGM-IT for primarily for the work related to IT SERVICES on the terms and conditions which are agreed by Mr.Deepak Nayak."
"The Deupty Manager - IT is duties here-under shall include acting in such capacity as and when required for any project/site of the company from time to time"
Sir I will be very much thankful to you for your kind advice which will decide my future course of action.
Warm Regards

From India, Mumbai

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