Gratuity Confusion: Should an Apprentice Receive It After Resigning?

Please clear my doubt. An employee joined an organization as an apprentice. He worked in the organization as an apprentice for a period of one year. Thereafter, he worked in the organization for four years. After that, he resigned from his job. Should the organization provide gratuity to him? I request you to clear my doubt.

Regards,
S. David

The Payment of Gratuity Act states that if an employee worked in an organization for a period of 5 (five) years, they are eligible to receive gratuity.

An apprentice is not an employee of the company; hence, he is not eligible for gratuity. For him to be eligible for gratuity, he needs to complete 5 years of service.

Regards,
Viraj

The period of the apprenticeship shall not be counted as service for the purpose of gratuity.

Regards,
R. Ponraj

Definition of an Employee Under the Gratuity Act 1972

Please see the definition of an employee under the Gratuity Act 1972, section 2(e):

(e) "Employee" means any person (other than an apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such a person is employed in a managerial or administrative capacity. However, it does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for the payment of gratuity.

So, when we calculate the gratuity period, we cannot include the apprentice period. Therefore, the above-mentioned employee is not eligible for gratuity.

If you have any doubts, please write to me.

Regards,
Jatin Prajapati
HR Executive

Definition of an Employee under the Gratuity Act 1972

Please see the definition of an employee under the Gratuity Act 1972, section 2(e):

(e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such a person is employed in a managerial or administrative capacity. However, this does not include any person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

While calculating the gratuity period, we cannot include the apprentice period. Therefore, the above-mentioned employee is not eligible for gratuity.

If you have any doubts, please write to me.

Regards,
Jatin Prajapati
HR Executive
30-12-2010 07:33 PM

Please note that he is not eligible for gratuity payment.

Regards,
Haris
Human Resources

An apprentice covered under The Apprentices Act, 1961 - Definition [(aa)]: An apprentice means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship.

Definition of an Employee

Definition of an employee under the Gratuity Act 1972 under section 2(e): (e) "employee" means any person (other than an apprentice) employed on wages, [3] [***] in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, [4] [and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for the payment of gratuity].

Thus, the definition itself gives a crystal-clear idea that the mentioned person will not be eligible for gratuity if they have not completed continuous service for 5 years as an employee.

Hope this will help you.

Regards,
Prashant

I would like to add one more thing to what others have mentioned. An apprentice means a trainee who is engaged as per the Apprentice Act, 1961, or according to the provisions of the Certified Standing Orders of the company. Therefore, if the employee in David's case was actually engaged as an apprentice by registering himself with the Related Instruction Centre or was engaged following the specific provisions in this respect given in the Standing Orders, then only his training period of one year would be excluded from the service for deciding eligibility and/or quantum of gratuity.

In other words, if he was taken as a trainee just by designation, the period of training will come under gratuity calculation. Please remember that for all labor-related laws, like ESI, EPF, Industrial Disputes Act, Minimum Wages Act, etc., a trainee other than the above-stated apprentices will be treated at par with an employee.

Regards,
Madhu.T.K

It's true that there are two types of trainees. One type is appointed to learn a designated trade for a specific period, and after this period is over, they have to quit. The second type consists of those who are appointed as trainees for a specific period, and when this period is over, they are appointed or promoted as confirmed employees. In the second case, the person who joined as a trainee and has completed five years of eligible service is entitled to gratuity. When calculating the gratuity period, their trainee period should also be counted.

Regards,
Prashant

The procedure for gratuity calculation is based on a minimum period of service of 5 years with payroll. An apprentice receives a stipend, not a salary. Therefore, there is no scope for providing gratuity.

Dear Sir,

The apprentice period is not counted in the calculation of the gratuity period. Therefore, in the above case, he is not eligible for gratuity.

Regards,
Jatin Prajapati

Suppose any employee works for 7 years in an organization, and they are told that gratuity will not be provided, then what should they do?

Very simple, file a petition before the Controlling Authority under the Payment of Gratuity Act, i.e., the District Labour Officer, Dy. Labour Commissioner, or Asst. Labour Commissioner (Central), as the case may be, for intervention and recovery of gratuity from the employer.

Please find the attachment.

Madhu.T.K

Dear Mr. Vivek,

Firstly, you have to submit your gratuity claim application form to your employer in writing. Gratuity should be paid within 1 month from the date of leaving service. From your post, it appears that neither you have submitted your claim in writing nor has the employer rejected your claim in writing.

Gratuity Payment Responsibility

In a scenario where an employee has worked for 7 years and the employer refuses to pay gratuity, is it necessary for the employee to submit a claim application? If so, please wait for an additional month before filing the application using the attached Form I.

I would like to inform you that it is the employer's responsibility to pay gratuity within one month of the employee leaving the organization, even if the employee has not explicitly requested it. This means that it is incumbent upon the employer to locate the employee and fulfill the gratuity payment. Therefore, any submission using Form I is not obligatory on the part of the employee.

I have also attached an application that should be submitted to the controlling authority if the amount payable is known and the employer fails to make the payment despite directives from the Labour department.

Thank you.

Regards, Madhu.T.K

I fully agree with your views. However, in this particular case, we are not sure on what grounds the employer is refusing gratuity. Furthermore, we are unsure whether the Payment of Gratuity Act, 1972 is applicable to the establishment. I feel that before approaching the Controlling Authority, there should be material evidence of the refusal of the gratuity payment. Additionally, as an employee, he should also fulfill his duty by submitting his claim in the prescribed form. Of course, not submitting a claim cannot be the sole reason for withholding gratuity.