Industrial Relations And Labour Laws
Management Consultancy
Srinath Sai Ram
Hr Manager
Salaried Employee
+2 Others

I know that the Gratuity applicable to the contractual worker as well. But right now I am facing one query from auditors that,
1) we are paying the gratuity amount to the Contracts in monthly CTC & we made the necessary changes in Contract copy.
2) The auditors raised query that why you are paying the gratuity before completion of service period mention in act.
3) If we are not paid on monthly basis then how it is done & how the compliance followed pertaining to act.
Kindly give your valuable suggestions. Thanks in advance.
31st March 2018
It is true that persons employed for fixed term are also to be paid gratuity but only when their term extends beyond 5 years. Therefore, the arrangement of paying gratuity component in cash every month is a wrong practice and if at the end of five years the employee demands his gratuity you will have to pay it then. The auditors are right. You may change the arrangement.
31st March 2018 From India, Kannur
Gratuity can be part of CTC.But Payment of Gratuity only after Relieving from Service & after completion of Minimum 5 Years of Service
31st March 2018 From India, New Delhi
Paying gratuity component reflected in CTC on monthly basis defies logic.
Suppose contract labour leaves in 2 years.he would get that much amount of gratuity. for the 2 years he worked without being entitled for gratuity.
Wrong practise by management w/o understanding basic concept.
31st March 2018 From India, Pune
There is no laid down provision in Payment of gratuity Act or in Contract Labour Act fastening the liability of gratuity on the principal employer. But certain PEs have been paying gratuity component in the regular payment to the contractor, esp. where the contract labour are fixed and they perform nearly regular nature of work and the arrangement is continuing on rather long term basis.
1st April 2018 From India, Mumbai
How contract labour engaged on regular work? I think u renewed the contract every year with same workforce. Contract labour engaged only in Temp. Nature of work. Hi
2nd April 2018 From India, Valsad
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