We have been employing workmen through contractors. If we change the employee from one contractor to another contractor will the contract employee be eligible for benefits like Gratuity and other terminal benefits or his services will be treated as a break.

Labour Law & Hr Consultant
Seasoned Ir Professional
Asst.manager -hr
Hr And Soft Skills
Sr Dy General Manager


Dear Friend,
The contractor under which he is going if that contractor is bound with legal compliance, then he is liable to pay the benefits.
If he is moving from a contractor to another contractor then his employment will be treated as new.

From India, Mumbai

In gratuity act says that for eligibility is continue service of 5 years or more in a premises or single employer.
Gratuity is loyalty payment for the particular employee by his employer.
in your case Contractor Employees moves to one contractor to Another contractor roll, here they are consider as a new employment.
So they not eligible.

From India, Bangalore

Dear Ayakkad,
The term " terminal benefit ", as the very name would suggest in employment parlance, is the consequencial monetary benefit due to an employee on his termination of employment after rendering a certain length of blemishless service under the same employer who is a legal entity as per its constitution. A contractor, therefore, would be a distinct legal entity such as a sole proprietor, partnership firm or an incorporated company. It then follows, in general, that whenever termination of employment takes place due to non renewal of the contract, the contractor is bound to pay gratuity only when the employees rendered the minimum qualifying service under him as per the provisions of the PG Act, 1972.

From India, Salem

When the contract itself is sham where the question of who should pay gratuity arises?
The act of engaging the same employee under different contractor from time to time itself is a proof that there does not exist a genuine contract. In such situation, the contract becomes a sham contract and the worker will get the benefits of regularisation and thereby the principal employer will have to py gratuity and other terminal benefits.

From India, Kannur

Changing employment from one contractor to another contractor, Principle Employer has no liability for any F&F payment.
But ensure that before joining another contractor his Final dues is cleared from first contractor and keep the papers with you for record.

From India, Ludhiana

The question is not joining different contractor by a worker but engaging the same worker under different contractor. That is Mr A is an employee of contractor B and when the contract expires, the same Mr A is made an employee of Mr C, the new contractor. You can chose any employer of your choice but what is the liability of the principal employer when the same worker is engaged over so many years but under different employers.
From India, Kannur

The workmen of one contractor can not be workmen of another contractor. So the change of employment from one contractor to another causes break in service.
The case would be viewed differently as Sham & Camoflague contract, if the workmen continued to work in same place years together but change of contractor is happening. Then the workmen will be eligible for all benefits under contineous service.

From India, Mumbai

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