Hi Sir, gratuity payment to the employees liable to the contractor or Principal employer.
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Immediate liability vests on the Contractor: in case of failure by the Contractor, as per the ratio decidendi of the Madras High Court's judgment, the vicarious liability of the Principal Employer for payment of wages u/s 21(4) of the CLRA Act, 1970 can be extended to the payment of gratuity also.
Sec 21(4) makes principal employer liable if contractor fails to pay wages.Definition wages is same as in POW Act 1936,which as per sec 2 (vi) (d) of POW Act includes ,
a sum which by reason of termination payable under any law on termination of employee,but for which no time limit for payment is provided.
This definition was made in 1958 before the gratuity Act was made.
Any gratuity other than the above is excluded from wages by item 6 of the definition.
Hence I feel the gratuity payable by contractor under POG Act is not binding on PE.
Varghese Mathew
Dear Mr.Varghese Mathew,
Thank you for your quick response and in fact, I was also of the same opinion with reference to the exclusion clause (6) of the definition of the term "wages" u/s 2(vi) of the Payment of Wages Act,1936. But after carefully going through the entire text of the judgment by the hon'ble High Court of Madras in Madras Fertilizers Ltd., v The Controlling Authority under the PG Act and Others [ 2003 LLR 244 ], I realized the meticulous interpretation employed by our higher Judiciary by paying minute attention to the contextual meaning of even an ordinary word of conjunction like "OR" and changed my opinion. For the sake of ready reference, let me give an extract of para 26 of the judgment delivered by Justice V.S.SIRPURKAR as follows:

" The very language of sub-clause (6) suggests that any gratuity which is not covered by clause(d) is excluded from the term "wages". This would presuppose that clause(d) covers some gratuity. Which would that gratuity be is the moot question to be answered. The answer is to be found in the plain language of clause(d) which opens with the words " any sum which by reason of the termination of employment of the person employed is payable under any law". ------------ --------- ------- This clause is complete in itself and therefore, it can be safely held that the gratuity which is payable under the Payment of Gratuity Act is well covered under clause(d). Learned Senior Counsel, however, suggests that the subsequent clause starting from the words " contract or instrument " suggests that such law, contract or instrument should not provide for the time within which the payment is to be made and in fact, there is a time limit prescribed in the Payment of Gratuity Act. In my view, such cannot be the import of the last clause. The last clause qualifies only " the contract or instrument" because of the user of the word " provides ". Now, if the letter 's' is added to the word " provide", it would be only when there is the user of singular subject as against the plural subject. The phrase " contract or instrument ", because of the existence of the word "or" would become a singular and therefore, the verb will have to be used with addition of the letter "s". But such would not be the position if the word "law" is also to be added. It will then become " law and contract or instrument" in which case the verb will have to be used as if the subject is plural. Therefore, it is clear that the clause starting from the word "contract" and ending with the word " is to be made " is an independent clause and the qualification given in that clause is only for " contract or instrument " and not for "law". The plain meaning of the clause would be that where any sum is payable on termination of employment of the person employed under any law ( in this case the Payment of Gratuity Act ), it would be covered under clause (d) and therefore, it is excluded from the operation of sub-clause (6) and therefore, will amount to wages. Once this construction is accepted, it is clear that it will be the basic responsibility u/s 21(4) of the CLRA of the petitioner to make the payment of gratuity and the petitioner will have a right to recover that sum from the third respondent/contractor because according to me the initial responsibility to make payment of gratuity lies with the third respondent/contractor."

It is to be noted that the ratio decidendi of the above judgment stands followed by the Madras High Court in a similar case between the Superintending Engineer, Mettur Thermal Power Station and the Appellate Authority/ Joint Commissioner of Labor, Coimbatore and another in WP NO.6633/2008 decided on 18.07.2012.
The contractor is liable for payment of gratuity not the Principal employer, provided contractor obtained a licence under CL(R&A).
Gratuity is payment done to employee for completing 5 years in a organization.
So, if an employee has been in the organization for 5 years gratuity should be provided by the contractor.
If contractor is not providing you with gratuity then one should approach the principal employer.
I hope you found this information useful.
If you have any further queries contact me @8356832404
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