Payment Of Gratuity By Principal Employer To Contract Employee For The Period Worked [Thread 614571] - CiteHR
Umakanthan53
Labour Law & Hr Consultant

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Dear All,
Feb 2019 - We have appointed ABC Manpower supplying contractor agency to do House Keeping / Security.
Nov 2019 - Their one of the old employee Mr. XYZ who is working with ABC since year 2012, who is working at our site since Feb 2019 is leaving ABC company.
Please confirm - He has completed 7 yrs with ABC company but will be completing only 9 months with us. What will be our liability with respect to his Gratuity Payment.

Dear Chandrakanth,
Extension of the doctrine of Vicarious liability enjoined upon a principal employer u/s 21(4) of the CLRA Act,1970 regarding payment of gratuity to the workmen of the contractor engaged by him still remains a matter of controversy among the various High Courts.
From the inputs given, I am of the opinion that even the proportionate liability of the PE has not arisen since the exiting workman had only completed 9 months of service as contract labor in the establishment and as such the PE can legally resist the claim for gratuity, if it is staked against him also.
Alternatively, the PE may pay the entire sum of gratuity to the employee and recover the same from the contractor.

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