I have a query regarding Gratuity.
An employee is working in road Infrastructure Company. He completed 5 years of his job he joined the Company in July 2013. When he resigned, He demanded his gratuity and experience certificate for the tenure he served for the company (More than 5 years). Company management denied his request by saying that he served initially 2 years in the subsidiary/SPV company of theirs and then he transferred into parent company so his tenure of 5 years is yet not completed because he worked in two different companies and he will be given two different experience certificates one is from SPV company and the second one is from parent company.
Employee challenged their statement by saying that:
1) He was issued appointment letter on the letter head of parent company. So they can’t put his name in subsidiary company without his consent and intimation. Company did so in a fraud and cheating intension.
2) He was paid cash payment on combined sheet of employees and no salary slip was given to him. His deducted PF was submitted in the PF code of subsidiary company about which he was not aware and nobody intimate him.
3) The registered address of subsidiary company and parent company is same. Directors of both companies are same. Parent company hold 100% equity shares of subsidiary company during all the tenure of existence of subsidiary company. They can’t deny that the ownership of both company are same.
4) Subsidiary company dissolved in parent company in Nov. 2017 after completion it’s project. If any old liabilities comes on the name of subsidiary company that also goes to the parent company.
Is this claim of employee right and if it is so then under which acts he can lodge a complaint against company? or the company is succeed in manipulating the employee?
From India, Indore
An employee is working in road Infrastructure Company. He completed 5 years of his job he joined the Company in July 2013. When he resigned, He demanded his gratuity and experience certificate for the tenure he served for the company (More than 5 years). Company management denied his request by saying that he served initially 2 years in the subsidiary/SPV company of theirs and then he transferred into parent company so his tenure of 5 years is yet not completed because he worked in two different companies and he will be given two different experience certificates one is from SPV company and the second one is from parent company.
Employee challenged their statement by saying that:
1) He was issued appointment letter on the letter head of parent company. So they can’t put his name in subsidiary company without his consent and intimation. Company did so in a fraud and cheating intension.
2) He was paid cash payment on combined sheet of employees and no salary slip was given to him. His deducted PF was submitted in the PF code of subsidiary company about which he was not aware and nobody intimate him.
3) The registered address of subsidiary company and parent company is same. Directors of both companies are same. Parent company hold 100% equity shares of subsidiary company during all the tenure of existence of subsidiary company. They can’t deny that the ownership of both company are same.
4) Subsidiary company dissolved in parent company in Nov. 2017 after completion it’s project. If any old liabilities comes on the name of subsidiary company that also goes to the parent company.
Is this claim of employee right and if it is so then under which acts he can lodge a complaint against company? or the company is succeed in manipulating the employee?
From India, Indore
Dear Mahesh,
If the facts of the case presented in your post are true and correct, the employee can file a claim for gratuity against the Parent Company for the entire period of service he rendered as per the directions and with its knowledge as well under section 7(4)(b) of the Payment of Gratuity Act,1972 before the Controlling Authority appointed under the Act for the place where he worked last. Prior to that he would have to issue a formal notice of claim to the employer. Therefore it is better to engage the services of an advocate to do the formalities and represent the employee before the C.A who is a quasi judicial authority.
From India, Salem
6016If the facts of the case presented in your post are true and correct, the employee can file a claim for gratuity against the Parent Company for the entire period of service he rendered as per the directions and with its knowledge as well under section 7(4)(b) of the Payment of Gratuity Act,1972 before the Controlling Authority appointed under the Act for the place where he worked last. Prior to that he would have to issue a formal notice of claim to the employer. Therefore it is better to engage the services of an advocate to do the formalities and represent the employee before the C.A who is a quasi judicial authority.
From India, Salem
Dear Umakanthan Ji,
Thanks for your valuable suggestions.
All facts are true in the post.I studied the section 7(4)(b) of the Payment of Gratuity Act,1972 that if their is any dispute regarding the gratuity then we can represent the matter to Controlling Authority.How would any person can know about the Controlling Authority of his workplace and his contact no.?In my post I also want to know that for the act of employer can a case of fraud or cheating be lodged against him?If yes then under which act he can be penalised for harassing and cheating his employees.In my company there is more than 50 cases where employer is not paying Gratuity to employee by moving them from one subsidiary company to another subsidiary company and employee doesn't know anything about the rule and intention behind the act of employer.
From India, Indore
Thanks for your valuable suggestions.
All facts are true in the post.I studied the section 7(4)(b) of the Payment of Gratuity Act,1972 that if their is any dispute regarding the gratuity then we can represent the matter to Controlling Authority.How would any person can know about the Controlling Authority of his workplace and his contact no.?In my post I also want to know that for the act of employer can a case of fraud or cheating be lodged against him?If yes then under which act he can be penalised for harassing and cheating his employees.In my company there is more than 50 cases where employer is not paying Gratuity to employee by moving them from one subsidiary company to another subsidiary company and employee doesn't know anything about the rule and intention behind the act of employer.
From India, Indore
Dear Mahesh,
I can very well understand your anger which can not be undermined as unjustified or unnecessary. However, in such moments of anger caused by despair and dejection, one should focus his attention towards the remedial measures readily available before him only and avoid excess of enthusiasm dictated by emotions. In general, employment disputes are a subject matter of Labor Jurisprudence only. In particular any dispute relating to a service condition covered by an exclusive and special Labor Law should be resolved under such Law only. Gratuity is such a condition of employment covered by a special Law viz., the Payment of Gratuity Act,1972 which is a complete code in itself regarding the gratuity of the industrial employees. When the gratuity payable to you is denied by the employer based on a contention which is untenable, you have to approach the forum designated for the purpose only. You can not plead inability on the ground of difficulty in identifying the forum for redress. Go through the web site of the State and you will find the C.A under the P.G Act for the place where you worked last or make a visit to any Labor Office in your area and they will guide you.
From India, Salem
I can very well understand your anger which can not be undermined as unjustified or unnecessary. However, in such moments of anger caused by despair and dejection, one should focus his attention towards the remedial measures readily available before him only and avoid excess of enthusiasm dictated by emotions. In general, employment disputes are a subject matter of Labor Jurisprudence only. In particular any dispute relating to a service condition covered by an exclusive and special Labor Law should be resolved under such Law only. Gratuity is such a condition of employment covered by a special Law viz., the Payment of Gratuity Act,1972 which is a complete code in itself regarding the gratuity of the industrial employees. When the gratuity payable to you is denied by the employer based on a contention which is untenable, you have to approach the forum designated for the purpose only. You can not plead inability on the ground of difficulty in identifying the forum for redress. Go through the web site of the State and you will find the C.A under the P.G Act for the place where you worked last or make a visit to any Labor Office in your area and they will guide you.
From India, Salem
Dear All,
Now a days most of establishments are considering Gratuity part of CTC but whenever employee leaves or resign before completion of five years employer is not paying his gratuity. I think if it is part of salary / CTC at least his deducted amount should be paid to left employee.
Please share your opinion.
From India, Gandhidham
Now a days most of establishments are considering Gratuity part of CTC but whenever employee leaves or resign before completion of five years employer is not paying his gratuity. I think if it is part of salary / CTC at least his deducted amount should be paid to left employee.
Please share your opinion.
From India, Gandhidham
To
EKCLTD
In my company gratuity is not a part of CTC but the rule of Gratuity is very clear that an employee has to complete 5 years regular service in a company. In my views adding gratuity in CTC is not a good practice. It creates confusion for the deducted amount. However if an employer is adding gratuity in the CTC then he must properly guide the employee at the time of joining that it will be returned to him only after completion of 5 years and intimation responsibilities must be of employer because you can't expect that every employee is aware with the rule of Gratuity. If employer intimated the employee and not returning the Gratuity before 5 year then he is right at his end.
From India, Indore
EKCLTD
In my company gratuity is not a part of CTC but the rule of Gratuity is very clear that an employee has to complete 5 years regular service in a company. In my views adding gratuity in CTC is not a good practice. It creates confusion for the deducted amount. However if an employer is adding gratuity in the CTC then he must properly guide the employee at the time of joining that it will be returned to him only after completion of 5 years and intimation responsibilities must be of employer because you can't expect that every employee is aware with the rule of Gratuity. If employer intimated the employee and not returning the Gratuity before 5 year then he is right at his end.
From India, Indore
Dear EKCLTD,
You can find a lot of discussions in this forum regarding C.T.C. Of late, some of the very knowledgeable members too seem to be a bit tilting towards the idea of C.T.C forming part of the employment contract and as such hold the view that gratuity, if shown in the C.T.C, should be paid irrespective of the length of service of the employee in case of his early termination. At the out set, of course, I would accept this as a plausible argument for deep consideration.
At the same time, however, I am unable to accept such a contention because of the very nature of the concept of C.T.C. It could be a mere statement projecting the over all cost to the company per employee per year. As such, at the most C.T.C is a conceptual aid to assess the employer's overall financial commitment toward every hired position or job including salary/wages and all other fringe benefits payable per year. If you break it down on monthly basis it is the sum of monthly gross salary/wages+ indirect benefits quantifiable in terms of money. Those indirect benefits, again, are statutory and non statutory. Though such statutory benefits have to be incurred by the employer per employee, their final payments are certainly subject to the conditions imposed by the statutes only.
Therefore, since gratuity being just included in such a statement of presumptive assessment only for the guidance of the employer and employees concerned for deciding the overall acceptable compensation package, the employee can not demand it when he has not fulfilled the statutory conditions attached to it.
From India, Salem
You can find a lot of discussions in this forum regarding C.T.C. Of late, some of the very knowledgeable members too seem to be a bit tilting towards the idea of C.T.C forming part of the employment contract and as such hold the view that gratuity, if shown in the C.T.C, should be paid irrespective of the length of service of the employee in case of his early termination. At the out set, of course, I would accept this as a plausible argument for deep consideration.
At the same time, however, I am unable to accept such a contention because of the very nature of the concept of C.T.C. It could be a mere statement projecting the over all cost to the company per employee per year. As such, at the most C.T.C is a conceptual aid to assess the employer's overall financial commitment toward every hired position or job including salary/wages and all other fringe benefits payable per year. If you break it down on monthly basis it is the sum of monthly gross salary/wages+ indirect benefits quantifiable in terms of money. Those indirect benefits, again, are statutory and non statutory. Though such statutory benefits have to be incurred by the employer per employee, their final payments are certainly subject to the conditions imposed by the statutes only.
Therefore, since gratuity being just included in such a statement of presumptive assessment only for the guidance of the employer and employees concerned for deciding the overall acceptable compensation package, the employee can not demand it when he has not fulfilled the statutory conditions attached to it.
From India, Salem
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