Industrial Relations And Labour Laws
PRABHAT RANJAN MOHANTY
Hr & Ir
Head - Ir/hr
Sr.officer At J K Lakshmi Cement Ltd
Labour Law Advisor
Sr.manager - Hr&admin
We should not be appointing employees just to deny the benefits. Let us think positively and employ people for a long service. This will give them a feeling that they are being taken care by the employer. Gratuity is an amount paid for the long service rendered and as such you should have taken the entire benefits which could be taken from an employee. On the other hand, if he is not giving you any benefits, you should have sent him out immediately or not renewed his contract any more. Better think that he had benefited the company and do not think that he had only made cost to the company.
When you can exit the employee in the PF, why can't you enter the same employee?
A service break in PF will no way affect his continuity of service for claiming gratuity. An employee who has put in 240 days of working in 12 months is said to be in continuous period. Between each renewal if there is one month gap, this would be regarded only as artificial interruption of service purposefully to deny the employees' right to get gratuity. If this employees is not a supervisory or managerial employee, he can file case against the employer treating this as an unfair practice coming under Industrial Disputes Act.
I have attached a case which is self explanatory and is applicable to the case in reference above,ie, employing persons for fixed term and renewing the same year after year.Please refer that also.
13th June 2019
13th June 2019
Employee doesn't come under pf esi as he is on contract giving consultancy services, but what m asking is after the end of contract, if he is not available for 1 month n join with us, with a fresh contract year on year with same 1 month break, will it be counted as gratuity ?
Now you say that he is engaged through a consultancy(?) is he himself is the consultant? or simply he is sent by the consultant?
He can be excluded from ESI if his remuneration is more than Rs 21000. he can be excluded from PF if his salary is more than Rs 15000. If the salary is not more than 21000, even if he is sent from the consultancy he should be given ESI. Similarly, if his PF qualifying salary (the salary on which your company deduct PF of other employees) is less than Rs 15000, he should be given PF even if he is not under your rolls.
Now, if he has been sent by a consultant, he is a contract worker whose employer is the consultancy company. If that is the case there is no need for him to make a contract with you. It should be with Principal employer, ie, you and the consultancy.
Another possibility is independent contractor. An independent contractor is one who takes up work and does it and returns it. He will not be an employee of you and as such can be excluded from ESI,PF and ultimately gratuity also. But an independent contractor need not take a gap in between.Why should there be a gap? that is not required. Again an independent contractor will not be following the office timing, he will not follow your dress code, he will not be supervised by your people on matters other than quality of the end products delivered or services rendered. He will not follow your leave rules and you cannot take an disciplinary action against him other than termination of the contract.
One important point that I want to make is that before posting,make everything clear. When you post the issues very clearly and transparently, we can advise you properly. I have posted so many things here,mos of these are not related to you.But I was made to post such things because your question was improper. I am not fully convinced about your query or apprehensions because there are still some grey areas. I am sure that the employee is not an independent contractor but is coming to your office in time, following the leave rules, following the instructions of your persons and he is subjected to disciplinary action as per your company polices.
Thnx, for ur in depth explanation, but he himself choose to go for a month for some reasons, n that doesnt fullfill the continuous service, point neither it was mentioned in his contract that he will be provide 1 month vacation, also in contract it was mentioned that contract will be deemed to be ended automatically once contract end date approaches.
Secondly there timings and leave structure is totally different from regular employees.
Now i actually want to ask this question coz due to some reasons, management has decided to device a pool of persons which should be given good salary but will be isolated from statutory & gratuity n other benefits, and for that everything is clearly mentioned in contract n clearly discussed with the person as well, but i need ur consent to implement it properly on ground.
You can make a contract with any person who are not coming under the Labour Acts like Industrial Disputes Act, Minimum Wages Act, Payment of Wages Act,Bonus Act or Standing Order Act but you cannot keep them away from Payment of Gratuity Act. A person working for you should be an employee by whatever name he is called. Any contract which you make will be void abinitio if it deviates from the general law.
You can have two or three leave rules each applicable to each category of people provided it takes care of the minimum requirements under the relevant Act, ie, if it is a factory, Factories Act,if a commercial establishment, as per the state Shops and Commercial Establishments Act. You can have different timing for different category of employees. But that will not make any difference. There are yet other tests to prove master servant relationship. You cannot run the show only with Consultants. You cannot have independent contractors for doing work of perennial nature.
Now again coming to the applicability of Gratuity Act to your so called employee who takes one month gap and signs another contract, if it is established that he had worked for 240 days in each year,he should be paid gratuity even if you provide that he has given an undertaking that he will work for years and at the end of his service he will not demand a gratuity. This is because making such an agreement is totally illegal.