Umakanthan53
Labour Law & Hr Consultant
Srinath Sai Ram
Hr Manager

*HR FEDERATION OF INDIA(HRFI)*
*QUERY - PAYMENT OF GRATUITY ACT*
Dear All
We have received a query from one of our members pertaining to Payment of Gratuity Act.
*BACKGROUND*
The company is manufacturing textile products since 1950. It is situated at remote place of Karnataka. Most of the activities are of manual nature. The company the following manpower strength
Permanent - 6670
Temporary - 3500
The temporary workers are working since long time. Some of the them have worked for 8-10 years and recently they have been absorbed on Permanent Roll of the company.
Mr Vikram had joined the company on 10th January 2007 as a temporary workman. Prior to that he had worked thru various contractors. The company absorbed him on permanent roll on 1st January 2016. He is retired on 31st August 2017 since he has completed 58 years of age.
The company has settled his full and final settlement.
Post receipt of F&F, Vikram raised the query to HR Manager that he has not received the gratuity payment. HR Manager told him that he is not eligible for payment of gratuity since he has not worked for 5 yrs.
Vikram approached to the Authority under Payment of Gratuity Act and given written complaint.
The Authority called the company officials and asked to submit the explanation. HR Manager has submitted the explanation stating the Vikram is not eligible for gratuity since he has not completed 5 yrs of service.
After week's time, the company received order from the Authority directing company to pay the gratuity to Vikram considering his service in temporary period.
*MANAGEMENT CONCERN*
If the company consider to pay the gratuity for temporary period, then there are another 3500 temporaries will also claim for gratuity.
*QUERIES*
1. Whether the company needs to consider the service of temporary period?
2. Whether the company can challenge the order in higher court?
3. What preventive measure company should take to mitigate the risk?
4. Any case laws on such case.
All the members are requested to kindly give your views on the above queries.
Part 2 guys such type of case studies come into selection process of some companies try to solve it
15th October 2017 From India, Mumbai
1. Whether the company needs to consider the service of temporary period? - No, as & when employee gets absorbed/joined new employer in this case its duty of new employer to get experience & relieving letter from of previous employment.
2. Whether the company can challenge the order in higher court? - How authority has issues order without hearing to other party, its purely theoretical question. I am sure this never happens with government authorities.
3. What preventive measure company should take to mitigate the risk? - Principal employer should ensure full and final settlement of employee before assigning to him to new contractor. Unless & until talent is scare in market long served contract employee should not be hired.
4. Any case laws on such case. - Are you student if yes you find and provide us . Thanks.
15th October 2017 From India, Pune
Dear Aniket.Palve,
While appreciating your natural desire, perhaps as a student of HR or Law, for finding answer to some legal questions relating to any service condition, I would like to advise you that it is better first to understand the particular service condition, its evolution as such and go through the relevant Law in force to govern it. Of course, no harm in taking a real-life situation as a case study. But trying to write a case on your imagination has its own pitfalls because of your lack of knowledge. A story teller needs thorough knowledge about the characters, situations involved in the story and their impact as per the existing social values. Better avoid pseudonyms and half-baked stories; in stead post your queries after going thru the relevant Acts and Rules.
Coming to your queries:
(1). The Payment of Gratuity Act,1972 does not distinguish between temporary and permanent service/employees. Under the Act, the eligibility for gratuity arises out of rendering not less than five years of continuous service under the same employer and the entitlement to gratuity for every year of service arises by completing 240 days of service in the establishment. Your hypothetical episode of thousands of workmen being allowed to be temporary employees for 8 to 10 years at a stretch by the management is an act of unfair labor practice and as such neither the workmen nor their unions would peacefully tolerate it. Even the settlement or orders of absorption takes prospective effect relating to their service, if such workmen prove that they have been on the temporary rolls for so many years, they are entitled to gratuity to the entire service including temporary service.
(2) The Controlling Authority appointed u/s 3 of the Act to hear and dispose of the claims relating to gratuity is vested with the powers of a Civil Court and the enquiry conducted by him is a judicial proceeding u/s7(5) and (6) respectively. Therefore, the disposal you narrated is only a figment of your imagination. However, there is provision for appeal to the next higher Authority.
Regarding all other questions both raised and hidden in your mind, study the Industrial Employment (Standing Orders) Act,1946, Industrial Disputes Act,1947 and the Contract Labor ( Regulation and Abolition) Act,1970 in addition to popular Labor Law Journals
15th October 2017 From India, Salem
Dear Aniket Palve
please reply to the following:
The company absorbed him on permanent roll on 1st January 2016. When Employee was taken on the Rolls of the Company his age was about 57 Years?He is retired on 31st August 2017 since he has completed 58 years of age.
After week's time, the company received order from the Authority directing company to pay the gratuity to Vikram considering his service in temporary period. please upload the Order for perusal
21st October 2017 From India, New Delhi
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