Gratuity & Leave Encashment Trust Fund
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We are a non-for-profit research organization registered under societies act. We are a project based organization and hire staff on short term contract (1 month to 1 year) and long term contract (renewable 3 years contract). Staff who are on long term contracts, are provided retirement benefits like PF, gratuity etc. In some of the cases, the period of short term employees are is extended time to time. In some cases, staff members are converted from short term contract to long term contract.
My understanding is staff are entitled of gratuity irrespective they are on short term contract or long term. Whether it is written in the contract (offer letter) or not. But, I seek your expert advice and my queries are as follows:
1. Will short term staff be entitled of gratuity if they continuously work for five years? Although, it is mentioned in the contract that staff will not get any other benefit.
2. If some staff are converted from short term contract to long term contract. Will staff get gratuity from the date of short term contract or from the date of long term contract?
3. Is societies not covered under ESI?

1. A staff will be entitled for gratuity if he/she worked for a period of 4 years 240 days regardless with the term of contract. Any clause in a contract which is against the public policy or labour welfare policy is void.
2. In Netram Sahu Vs. State of Chhattisgarh & Anr. the Supreme Court held that for calculating month of service under Gratuity scheme the continuous service of the staff will have to be taken into account. In this case the staff's date of joining will have to be taken under consideration for the purpose of gratuity eligibility as well as its calculation.
3. A society which have 10 or more no. of employees on any day during the previous year, the ESIC Act will be applicable.
Please get the referred judgement from the attachment.

Attached Files
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File Type: pdf Gratuity-Judgement_23-Mar-2018.pdf (87.7 KB, 148 views)

If employer wish to give benefits better than in terms of gratuity act 1972, it is allowed.
For example, if employer wish to
1.give gratuity benefits without any waiting condition of 5 years,
2. Payment of gratuity without any ceiling limit,
3. Gratuity payment calculation with a better term like 1 month salary for each completed year instead of 15 days wages
all of above including any term which more beneficial than gratuity payment term is allowed by the law as it gives additional benefits to employee.

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