Umakanthan53
Labour Law & Hr Consultant
Chalya
Engineer

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Last month i have resigned from a company where i was worked for 6.5 years. When I joined the company it was a proprietary company and after 3 years of joining they have registered as PVT LTD and asked to resign from proprietary and fresh appointment letter was given from PVT LTD and i have served 3.5 years in PVT LTD.
After resignation, when i asked for the gratuity they denied and saying you have not completed five years. Is this true?
No settlement has been made while moving from proprietary to PVT LTD.

From India, Bengaluru
Dear Chalya,
Change in the Constitution of the establishment from one form to another is only a cosmetic change and it can not affect the continuity of the services of the employees therein. However, you ought not have resigned as insisted by the management. Better file a claim for gratuity before the Controlling Authority under the Act and try to establish that resignation was obtained by the management by coercion. Chances are there.

From India, Salem
Here you have made a mistake "when asked to resign from proprietary, earlier company. Normally in such situation new company when they issue a new appointment order, they put a clause that for the purpose of Gratuity the earlier company services would be included. However you case that was not done.
However if the Proprietor of the earlier company, is still remaining as one of the Directors of the percent Private Limited Company, then you have a chance, that you can file a claim, before the Controlling authority under Payment of Gratuity Act

From India, Madras
Dear Mr. Umakanthan,
Thank you for your valuable suggestion. I will claim as suggested.
One more favour, have you anytime came across this kind of situation where employee was awarded with gratuity. If any such case, please let me know.
Regards,
Chalya

From India, Bengaluru
Dear Mr. Babu Alexander,
Thank you for your valuable suggestion.
The director for the PVT LTD is same as the Proprietary and he has not closed the proprietary company and there are few employee's working in that.
Regards,
Chalya

From India, Bengaluru
Dear Chalya,
Your further post confirms the change in the mere constitution of the establishment only and not that of transfer of the undertaking, if any as such involving change of ownership. But you have to prove that you were coerced to put down papers. If those employees who are still in service also faced the same situation just before the change of the Constitution of the establishment, it would strengthen the plea of coercion so as to deprive the continuity of service.

From India, Salem
Many Thanks, Mr. Umakanthan. Will keep posted on the progress. Regards, Chalya
From India, Bengaluru
Dear Friend,
There is no doubt you have worked for 6.5 years. Your work of 6.5 years in two business set-up for one is 3 years in proprietor and in Pvt ltd Company for another 3.5 years.
You resigned from the proprietary firm after 3 years. You joined in a new establishment after leaving the proprietary establishment.
You were given appointment in a new establishment, where you worked for 3.5 years.
On ground of employment of 3.5 years in Pvt Ltd, your employer is considered for not eligible for gratuity. This is a fact to which one should accept.
How come an establishment of 3.5 years old would pay gratuity?
The proprietorship firm & Pvt ltd are two different entity of different nature. Then your resignation comes in to picture, which is nothing but break of service.
Further, the Proprietary establishment has not closed till now. How would you say that both are not separate but one?
On ground of above facts you are not eligible for gratuity.

From India, Mumbai
Mr. Prabhat, Thank you for your kind reply.
I agree that I will not be eligible for the gratuity with the facts around now. But this is not acceptable.
As suggested by Mr. Umakanthan and Mr. Babu Alexander, What is your opinion on claiming for gratuity before the Controlling Authority under the Act.
Regards,
Chalya

From India, Bengaluru
Dear Chalya,
It does not matter whether my opinion is acceptble to you or not. The opinion provided is based upon facts provided by you.
There is nothing wrong to claim. If you suceed would open an avenue for others who have not considered for similiar condition.

From India, Mumbai
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