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4th February 2019 From India, Bangalore
5th February 2019 From India, Mumbai
Learned members discussed the liability to pay gratuity (under the Payment of Gratuity Act) w.r.t.employees exiting employees with <5yrs continuous service to qualify for gratuity under the Act. in this link
Whereas I am perplexed to note after the advent of 'liberalisation' era in early 90's the concept of 'CTC' has set in the HR practices in India especially in IT/ITES sector. We have seen innumerable employees robbed of their gratuity, a twin effect, one in the form of CTC components unpaid and second switching over employers in quick succession foregoing many years served inbetween resulting not eligible due to non-completion of qualifying continuous service of 5 yrs (if all combined would have crossed >5yrs). This a menace we mutely pass over in the last over 3 decades. It's a fact, though the CTC pattern is being practiced widely over 30-40 yrs by MNC & Indian Cos, there is still no attempt to codify to have a common law governing this and to protect the interest of lakhs of youth denied many benefits due to lack of proper legislation in India, mainly to address non-payment of Gratuity.
There are lots of judgments more or less dwell upon the subject but still no proper litigation and corresponding judgments thereon by either the HCs or by SC speaking CTC per se.
However the query of Sunil engaged my attention repeatedly and I don't want to leave this just simply on the pretext of < 5yrs stipulation. Here Sunil's case is genuine, he is left to suffer for no fault of him as he is denied gratuity due to closure and he didn't qualify on <5yrs norm. Whose fault is this, he couldn't complete 5 yrs as his co.was closed. Even leaving out gratuity is part of CTC he should be rightfully eligible at par with 'death or disability' as per Sec.4
"4.Payment of Gratuity.-(1)Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:
4.(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of [an employee who is employed in a seasonal establishment, and who is not so employed throughout the year] the employer shall pay the gratuity at the rate of seven days' wages for each season."
I attach a couple of judgments which speaks about 5 yrs of 'continuous service' and termination aspects.
Members are requested to comment with their inputs justifying 'gratuity on termination' with even <5 yrs service followed by suitably amending provisions relevant to closure & retrenchment of the ID Act vesting in them the right to gratuity as no proper legislation seem to be in the offing in the near future.
I wish some one like Sunil seek justice thru' legal means by quoting this gratuity part of CTC issues.
5th February 2019 From India, Bangalore
However, when the closure of the establishment is a genuine one resulting in the services of the employee coterminous with the closure, if the employee has rendered the minimum five years of continuous service in the same establishment on the date of closure, certainly he would be entitled to gratuity under the PG Act,1972 along with the other closure compensation. If not, the question of gratuity does not arise. In case the establishment's very age is less than 5 years, the same is the position. Of course, I do admit the application of the ratio decidendi of the Mettur Beardsell judgment of the Madras High Court in either case.
5th February 2019 From India, Salem
5th February 2019 From India, Bangalore
I go with the view that gratuity be made payable after cessation of employment for any reasons and for service in excess of six months particularly when it is considered as part of CTC
The present law needs suitable amendment to this effect.
In fact present provision of eligibility of 5 years' service is discriminatory as similar eligibility conditions are not applicable to fixed term employees who receive gratuity even for 1 year's service after completion of the fixed term employment.
There is no justification for discriminating one set of employees against another in the matter of gratuity .
Besides , any practice of deducting gratuity from employees' salary every month has to be vehemently resisted .Such employers should be brought to books by the aggrieved employee, unions and social activists.
6th February 2019 From India, Mumbai