Labour Law & Hr Consultant
Sr. Executive - Hr & Admin
+2 Others

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Respected seniors,
I work in real estate company as a H.R. executive and I want to know about the gratuity policy and what's the effects if i transfer a employee of one company to our another company and he hasn't completed 5 years services please tell me that can i transfer if yes what's the procedures and rules?????

Dear Rajput,
Gratuity is a terminal benefit payable to an employee based on certain no of years of his continuous and blemishless service under the same employer. Therefore, the question of transfer of gratuity from one employer/establishment to another does not arise normally for the reason that each establishment is a separate legal entity. However, in the case of several establishments functioning under the same employer and if their service conditions permit inter-unit transfers, then whatever the quantum of service rendered in one establishment can be transferred to another for the purpose of computation of gratuity.

Respected Sir, Is there any notification/guidline from govt. authority? If yes, please share and also breif the procedure of transfer the gratuity.
Section 4 Payment of Gratuity Act, 1972 prescribes as under:

(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,

(a) on his superannuation, or

(b)on his retirement or resignation,

(c) on his death or disablement due to accident or disease.

It is seen from the above that Gratuity is payable on termination, not on transfer. However, if certain sister concerns or subsidiary companies are under the same employer, and conditions of service provide for transfer from one company to another, then only the proportionate contribution of gratuity is transferred. There is no government order on it, but the Govt. has no objection to transfer of proportionate share of Gratuity from one company to another company if both the companies are under the same group of companies.


C.M. Lal


Transfer is possible only within the same group of companies. In this case service will be considered continuous service for the eligibility of gratuity benefits.
Dear Srijan,

Srivastava has given an appropriate answer quoting the relevant section of the Payment of Gratuity Act,1972. The definition of the term " employer " u/s 2(f) of the Act also specifies it is the person or authority having ultimate control over the establishment mentioned in sec.1(3). The various establishments mentioned in clauses (a),(b) and (c) of ss (3) of sec.1 can be a single establishment or a group of establishments depending upon their constitution such as sole proprietorship, partnership, company registered under the Companies Act,1956 or a society registered under the Societies Registration Act with or without branches. But, for all purposes under the PG Act,1972 the employer remains the same person in relation to the establishment as a whole even in the case of inter-unit transfer of his employees among his various units.

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