Gratuity Claim - Training Period Is Not Service? - CiteHR
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My son joined in a IT company as sap consultant on July 2nd 2010. First six months he was trainee getting monthly stipend. On 1st February 2011, he got appointed as junior consultant, with 6 months probation. He resigned the job and got relieved on 15 September 2015. The entire period he worked without any breaks. He asked for gratuity. Company refused saying that he did not complete 5 years since the training period is not service. Please give a reply standing legally and advise how to proceed.
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stipend is not wages / salary and it does not establish employer/employee relations
Very Good Question. It got me thinking & was forced to look deeper then usual.

In the case of Chairman-Cum-Managing ... vs Regional Labour Commissioner ... on 26 May, 2005, 2005 (2) ESC 1547. That you can find here

The following questions where framed :-

(i) whether a trainee or an apprentice is an 'employee' within the definition under the Payment of Gratuity Act

(ii) whether the period of training has to be counted towards 'service' for the purpose of calculation of gratuity under the Payment of gratuity Act, 1972 AND

(iii) whether the training period is to be counted as service for payment of gratuity in terms of Clause 4.2 of the V.S.S/V.R.S?

The court observed,

1) " The entire case rests upon the fulcrum of the questions whether there was relationship of master and servant or employer and employee subsisting between the petitioners and the respondents.The question of relationship of master and servant and employer and employee has been considered by their Lordships of Hon'ble the Supreme Court in a catena of cases. The crux of the decision of the apex court as well as various High Courts is that concept of employment has three essential ingredients, namely, he must be (a) employed on wages; (b) employed in (i) establishment (ii) factory (iii) shop etc. (c) employed to do work which may be of skilled, semi-skilled, unskilled, manual, supervisory, technical or clerical nature and their term of employment may be express or implied. Whether a person is an employee or not is a question of fact. A contract of employment may be for training i.e., a person may be employed for imparting education and training but it docs not follow from the fact that it is a contract of employment. There is well established distinction between contract for service and contract of service and also a contract of training or apprenticeship as used in context to The Apprentices Act, 1961. Mere existence of contract to employ does not constitute a relationship of master and servant until the contract is performed and the person is actually employed. The expression 'employed' used in Section 2(e), therefore, postulates relationship of master and servant and that such employment must be for wages earned by him."

2) " From plain reading of the definition, the term 'wages' means earned wages and not potential wages. The expression in accordance with the terms and conditions of his employment' mean no more than the remuneration payable or paid in employment. They have further to be earned in accordance with the terms and conditions of employment express or implied. The phrase used in the definition of 'wages' should not, therefore, be construed in a narrow sense. The question whether there is an implied term of employment is a mixed question of fact and law and not a pure question of fact. "

3) Whether the trainee is an employee or not would depend upon the terms of contract executed between him and the industrial establishment as well as on the nature of duties performed by him. It is evident that wages are the emoluments earned by an employee while on duty or on leave which implies that a person has to be employed in the establishment against a sanctioned post and is paid emoluments earned by him on fulfilling the terms and conditions of employment.

4) In this case " It is also not in dispute between the parties that the employees concerned were paid stipend during their training period and not wages. They were taken in employment after completion of training, hence the terms of contract of training executed between the petitioners and the guardians of the apprentices at the relevant time have an important bearing in the case. It is apparent from the contract of training appended as Annexure 6 to the writ petition that the petitioners did not guarantee any employment in the Corporation which is also evident from the advertisement. It was further agreed between the parties that if there was any violation of any terms of agreement by the trainees, the concerned apprentice craftsman trainee was liable to refund the amount paid to and spent on him by the employers on his training. The aforesaid conditions very strongly indicate that the respondents did not enjoy the status of employee in the Corporation as wages paid to an employee in terms of his employment are not returnable by him for the reason that he has earned it. Further, the respondents during the training period were neither appointed on any post nor even had any right to be appointed on a post after successful completion of their training. "

See website below for details
I noticed that in IT Companies, 240 days will be considered as one year instead of 360 days. Means 240x5=1200days continuously worked employee is eligible for gratuity, as he worked on 5 days in a week pattern.
Am I right?
Dear MKS
please check up on any of the company's record the date of joining is July 2nd 2010. If it is so then your son is eligible for Gratuity. If the DOJ is 1st February 2011 and if he is completing 4 years and 240 days as on 15 September 2015 then only he is eligible for Gratuity. Experts please correct me if I am wrong.
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