Am I Eligible for Gratuity After 9 Years with the Same Employer Despite Contract Changes?

I am working for a pharma company for the last 9 years on a contractual basis. For the first 4.5 years, I worked under a direct contract letter with the company. The contract got renewed each time the date expired. After about 4.5 years, they put me on a third-party contract and hired me as a deputy. Now, in this case, I still work for the same company but through a contractor. I have worked for about 4 years and 4 months. If I leave the job, will I be eligible for Gratuity under the Payment of Gratuity Act 1972, as I am not satisfying the 5 years of continuous service clause? But if you consider my case, the principal employer is the same, and the total service is 9 years.

Dear --

In this case, you do not seem to have worked with the same employer for a continuous period of five years, and therefore, you are not entitled to gratuity payment at this point in time.

R.N.Khola

But if I worked for the same company through a direct contract, and then through a third-party contract, with no break in employment (for 9 years in total), am I not eligible for gratuity? Do you have some case laws as precedent to a similar situation? Please advise.

Dear,

This is to inform you that the contractor and the direct employer both have separate entities under this Act. You are required to complete five years with any of them.

R.N.Khola

But what if my principal employer kept me on a direct contract for over 4 years and then asked me to work under a third-party contract? Here, the contract employees do not report to the contractor for functional reporting but to the employees of the organization. Only the payroll is different, and the contractor pays me a salary after receiving reimbursement from the company. I do not have a break in service, as I worked for the company from October 5, 2000, to July 31, 2005, under a direct contract and from August 1, 2005, to the present for the same company but under a third-party contract. It appears that I will lose my gratuity, for no fault of mine, since the change in the nature of the contract was not at my will, but I was asked to do so if I wanted to continue in the job.

Is there no case law that supports in favor of my contention to claim the Gratuity, either from the contractor or from the principal employer?

As mentioned by you, the contract is renewed every time when it expires. Is your contract period 1 year or on a project basis? In this case, there is discontinuity in service.

After completing 4.5 years, they shifted to a Third Party Contract, and again they have discontinued your services. As per the Payment of Gratuity Act, continuous service of 5 years is required to be eligible for Gratuity. In your case, as mentioned by you, I could not see continuity in the service. For further clarification, please refer to the Payment of Gratuity Act.

Dear Premak,

I think the law states that if a person works with a parent company on a contract for more than 365 days continuously, he is liable to claim all the benefits that the parent company provides. Under the Abolition of Contract Labor Act, you are entitled to claim that your company must make you a company employee. If you wish to take legal action against the company, please consult with your local labor lawyer.

Initially, when I was under a direct contract, they used to give me a six-monthly contract. However, there was no break in service for 4.5 years. Later, when they shifted me to a third-party contract, they kept mentioning in my contract letter that due to the extension of the project, my employment had been extended until a specified date. The contract remains continuous.