Umakanthan53
Labour Law & Hr Consultant
Nathrao
Insolvency N Gst Professional
+1 Other

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Anonymous
I have worked for an overseas company - as an employee 11.5 years back. (2008)

As there were just two employees - Gratuity was not applicable or mentioned in Joining letter, etc.

This overseas company was Acquired (globally) by another Global company, which had a Company in India.

For 3 years, I continued the arrangement with the original company (as a part of the acquiring company's group)

From April 2017 - I was transferred to the Indian company, which has multiple employees and gratuity was included in Joining letter (as percentage of basic).

However joining date was listed as April 2017, in payslips and other records, etc.

The former company has issued letter with employment details (of joining and leaving), where reason for leaving has been stated to be "Transfer to YYY Co".

I have also received a 10 year long service award, in 2018 by present Indian Co.

I have currently left this company - where (being on rolls for less than 5 years) Gratuity has not been considered.

I stand to lose substantial amount because of this - and would like to know whether tenable to accost the company I am leaving, and thus make the Gratuity payment applicable (in one of the two options, listed below).

My queries:

1. For an employer now having more than 10 employees - and thus under Gratuity rules,

- on separation, has original joining date and tenure to be considered (or only after they have come under the rule)

2. What is the obligation for an acquiring company - for the tenure to be considered, for a long serving original employee.

- is this for only from acquiring date, or from original joining date?

3. In my case : My original non-Gratuity employer status changed, effectively at time of Acquisition.

- Can I thus claim to be covered by the Gratuity

(a) with 11.5 years service (as total with old and new company)

(b) for 6.5 years service (as per date from acquirement)

(c) or be ineligible, if only the 3 years with current employment is applicable?

From India, Mumbai
Basically, statutory gratuity is a lump sum one time terminal benefit for a longer period of service rendered by an employee in the same establishment to which the Payment of Gratuity Act,1972 is applicable subject to the completion of continuous service for a minimum number of years which stands as five years at present.

When the applicability of the PGA,1972 is qualified with the total no of employees, once the Act becomes applicable to an establishment in terms of its employee strength, it continues to be applicable notwithstanding any subsequent reduction in the number of employees. Therefore, so far as the employees are concerned, the Act covers those employees who are in the service of the establishment either on the very date of commencement of the application of the Act to the establishment or later. Hence the no of years of service rendered by such employees prior to the date of application of the Act should be taken into account for the purpose of gratuity when the termination of their employment takes place later.

Regarding transfer of an undertaking by means of an agreement or by operation of law from one employer to another, compliance with the provisions of section 25-FF of the Industrial Disputes Act,1947 becomes mandatory either by the transferee or by the transferor. Acquisition of one company by another very well fits into the above category. In other words when a company to which the PGA,1972 is not applicable because of the less than statutory minimum employee strength is acquired by another company to which the Act is applicable along with all assets and liabilities including employees with continuity of service, the acquiring entity becomes successor-in-interest towards the service liability of the employees of the acquired entity. Therefore, the no of years of service rendered by such employees in the former entity automatically merges with the service in the latter and as such gratuity becomes mandatorily payable for the entire combined service..

In view of the legal position thus explained , the poster is certainly entitled to gratuity for the entire services rendered by him in both the companies. He has to send notice of joint claim for gratuity to both the companies and in case of any rebuttal by one or some other ground, he has to file an application for gratuity before the Controlling Authority under the Act. It is better for him to engage the services of an advocate.

From India, Salem
Anonymous
Many thanks for the prompt reply and the details provided.
It is heartening to know that my position is thus tenable and that I can pursue on the matter.
Would it make a difference if the Indian company were to state that it has no connection with the previous company.
As the first Company is only also just part of the International Group - to whom such an appeal would need to be made, who is not an Indian entity?
Also - what are the other expected other points that could be part of the rebuttal from the Company?
Regarding the advise to send notice to both companies, it would not be possible as the first company has already (on other matters) responded that after the transfer, all matters are to only be taken up with the Indian company.
Thanks again

From India, Mumbai
Visit your nearest labour officer in Deparment of labour,when lock down is over. He will guide you correctly. As far as I am understand you are entitled for gratuity.
From India, Pune
Dear friend,

In every legal issue regarding rights raised by a third party against two or more number of persons as respondents as a result of a transaction between them which began in the past with one party and continues in the present with another party because of the incidence of transfer rights among them, each such respondent would naturally disown his statutory liability to satisfy the claim and for that very purpose they would present all the cock and bull stories. But the claimant should not be carried away by such of any one's defencible stand and proceed against the other alone for it is possible that the statutory authority may dismiss the claim as not maintainable on the ground of misjoinder or non joinder of parties. That's why the suggestion to make joint-claim against both the companies so that the Controlling Authority under the PGA,1972 can weigh their statements of defence and fix the liability to pay gratuity according to law.

From India, Salem
Sec 25 FF is applicable to workmen only.The transferee is liable for retrenchment compensation only if it is liable under the terms of transfer or if his service is not interrupted by such transfer agreement.
From India, Thiruvananthapuram
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