Thread Started by #harini-murugesan

Can somebody give me a clarity on the below said instance? If an employee works for 5 years in a small company where the employee strength is less than 10.
How does he claim for his gratuity post his resignation?
27th July 2018 From India, Chennai
I think that the question would've been clear if what the company actually is - a factory or a shop or an establishment or an educational institution. If it is a factory, the criterion of no. Of employees doesn't restrict the application of the Payment of Gratuity Act, 1972. If the company belongs to the other types mentioned, it is out of the coverage of the Act and the employee is not eligible for gratuity under the Act.
27th July 2018 From India, Salem
Respected Umakanthan Sir,
I wish to bring more clarity in this subject, with due respect to you.
The PoG Act is applicable to-
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.
Here factory, mine, oilfield, plantation, port and railway company means factory, mine, oilfield, plantation, port and railway company as defined under respective Acts as applicable to it. If 10/20 or more persons are employed in manufacturing process, then it is a factory (except in Maharashtra it is now 20/40).
Since the strength of employees is less than 10 in this particular query, the employee is not entitle for Gratuity under the Act.
However, in case the employees strength in the past had crossed 10, then the scenario would be different. Once the law is applicable, it will continued to be applicable even after the strength falls down the threshold.
27th July 2018 From India, Mumbai
If the firm had more than 10 employees at any stage and then come down in strength,gratuity may have been applicable.
In this case from information provided,entitlement of gratuity does not arise in this case due to lesser number of employees and therefore not attracting provisions of Gratuity Act.
27th July 2018 From India, Pune
I would like to say that what Umakanthan Sir has said is perfectly right. First thing to be considered in order to see whether an establishment will come under Payment of Gratuity Act is whether it is a factory or other establishment and if it is a factory the payment of Gratuity Act is applicable to it even if the number of employees is less than 10.
Now coming to definition of factory it is a misunderstanding that only a factory which has minimum 10 workers will come under the coverage of Factories Act. Please refer section 85 of the Factories Act and the state government's authority to declare any establishment having less than 10 workers to declare it as an establishment coming under the coverage of Factories Act. As such there are quite a large number of industries the establishments in which will come under Factories act eve if the number of employees is less than 10. For example, in paint manufacturing the Factories Act is applicable if the establishment employs just 3 persons! Therefore, just a bare reading of the Act without sub clauses and rules made by the appropriate authorities should be discouraged.
28th July 2018 From India, Kannur
Thanks a lot for your time in answering my query. I got it right.
30th July 2018 From India, Chennai
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