Rimi Ghosh
Dear All, Would request suggestions on the below situation
Few workers under a labour contractor X has worked for 3 years and then were moved under labour contractor Y. In both cases the PF was deposited under the PF code of the principle employer. After another 2 years of service under Y the workers are now claiming gratuity if they resign.
Is the principle employer liable to pay gratuity in such case?
Kindly advise.

From India, Kolkata
Ceo-usd Hr Solutions
Sr Executive
Asst.manager (hr)
Korgaonkar K A
+1 Other


Never deposit contractor's PF contributions in principal employer PF account. You know what this implies? It implies that the contract is sham & there can be case of abolition of contract system. In such case the contract employees will come on company's muster roll. Somehow or the other but carefully tell the contractor to obtain PF code or engage one who has PF code.
Now for gratuity. Were the employees issued appointment letter? If yes, was clause of transfer of service included in it? Generally answer would be no.
Contract employees can claim gratuity from present contractor. But there will be legal base as both entities are separate. They can't claim gratuity from principal employer as there is no employer- employee relationship. Claim can be made only if such eligible employee is denied gratuity payment by contractor.

From India, Mumbai

Though entities are different are the proprietor or partners the same in both cases? Then the employees will have case to claim gratuity.
From India, Mumbai
korgaonkar k a

Answer to your question is - NO.
However, if you approach an advocate like me and do legal fight on filing a claim, you may succeed on leading certain circumstantial evidences, according to me.
Wish you all the best.

From India, Mumbai

Dear Rimi,
This is a classic case of exploiting Contractual labour. Forget about law points. The poor contract labor has been working for same PE 5 years or more under 2 or more contractors. Who is responsible for changing the contractors? Obviously PE not the contract labor. Then why they will suffer. Those laborers have been performing on behalf of same PE and in most of the cases under the supervision and control of PE side by side along with the permanent employees of the PE who are eligible for Gratuity.
I know one very famous MNC who follows the same process to exploit the contractual labor. I also know another mid cap MNC who have changed the contractors for several reasons but continued with same laborers years together who pays Gratuity to contract labor as and when required considering all past services. The agreement between the PE & Contractor is actual cost plus fix service charge of contractor variable month to month basis based actual attendance, bonus, Gratuity, engagement of contractual labor etc.
To my opinion this is ideal one should follow by the good PE.
At the end of the day, we should not forget that those contractual laborers are performing for PE only and they should not be deprived for technical reason (law point etc.).
Thanks & Regards,
S K Bandyopadhyay(KOLKATA)
USD HR Solutions

From India, New Delhi

Rimi Mam
it is but Obviously paid by the Principal employer if the contractor of the contractual Labours is denied to pay.
further if i go in detail,If you view the provident fund detail and the Esic detail and cross examine it , which will show that the contractual labours which are praying for there right are working under the one ...and only one principal employer from last five ( or eligible year).beside on the registration of the principal employer of contractor will also support although the contractors are different but PE is one and single one.
and it is the prevailing practices of the company to pay the contractor, a calculated amount for per day wages which composite of minimum wages+safety Equipment cost +provident fund (employer part)+ESIC (employer part)+welfare fund (employer part)+gratuity and etc which is applicable for that particular land of law.
so i think which is not a natural justice to the contractual worker not to pay the gratuity amount.
Please correct me on the facts if I am wrong.

From India, Nagpur
korgaonkar k a

Dear Friends,
One of the members asked me a question through private message as under:
"Dear Keshav Sir,
I am not disagreeing on the answer you gave for above question but, I want to ask if employer is depositing the PF under his code for 5 continuous years would employee can claim to be on employers roll."
Instead of giving answer to him through private message, I prefer to put my say here as under:
The question is on, employment claim on PE's roll and not on Gratuity.
Merely depositing PF and ESI of contract labours under the code allotted to PE will not attract the claim of employment on PE roll. PF and ESI permits remittance of contract employees under the code of PE.
However, on certain other parameters one can succeed his claim of employment on PE's roll in court of law.
Please be noted that the subject of section 10 of CLRA which deals with prohibition of employment of contract labour is a separate subject altogether and the jurisdiction under this section lies either with Central or State Government, as the case may be.
Please also be noted that the function of the Central or State Government is an administrative function and not a judicial or quasi judicial function, and that in performing the said administrative function the Government cannot delve into merits of the dispute/claims.

From India, Mumbai

Dear All,
please take out your joint under taking , which has been given the contractor at time of engagement . please refer to recent notification by the central government . it is ultimate responsibility of principal employer to pay all the payables to CLR's any or other workers who were engaged to work in the premises of Principal employer .

From India, Visakhapatnam

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