Employee Resigned After Serving Two PSUs: Is He Entitled to Gratuity? Seeking Advice

Dear Fraternity Friends, I am facing a peculiar situation in which one of our employees has resigned. Before joining us, he had served another PSU for 3 years and six months and served us for 4 years and four months. Now he is claiming that since he had come from one PSU to another PSU, serving a total of 7 years and 10 months, he is entitled to gratuity.

Members are requested to please share their views for the rightful disposal of the case.

Regards

In response to your question, my view is that since the employee has joined a new establishment, they have no relationship with the prior establishment unless the new establishment is a sister concern or department of the previous one. Therefore, there is no need to add the prior service period to the new service period.

You mentioned that your establishment is a PSU. It is important to note that not all PSUs are the same entity. Therefore, in my opinion, the service periods should not be combined for Gratuity purposes.

Regards,
Manoj Prasad

Dear Kasp, as per company law, a company is an individual entity/body, having no relation with another company, even if it relates to the same group of companies, let alone another PSU. Unless any agreement has been made with him earlier at the time of recruitment of the employee to count his past service in another PSU and a specific mention made in his offer letter/appointment letter, the employee does not have any right to claim the benefit of his past service in another company. However, if it has specifically been agreed at the time of his appointment to give him any benefit for his past service in his previous employment, you will have to honor that.

Otherwise, you need not worry about his claim; just reply to him in consultation with your company secretary.

Regards

PS Dhingra
CEO cum Management & Vigilance Consultant
Dhingra Group of Consultants
New Delhi
[Email Removed For Privacy Reasons]

Dear All,

I have worked in a GOI department which was subsequently converted into a central Public Sector Undertaking. I retired after 41 years of service from that PSU. From my experience and studies, I may state here that there is a policy of the GOI to encourage mobility in the PSUs. The rules state that if an employee moves from one PSU to another through the proper channel, complying with all the laid-down procedures such as the application routed through the previous employer, proper relief, transfer of the service book with leave records, and pay protection, then his past services in the previous PSU are to be counted for the gratuity purpose.

Mr. Kasp may please verify the service book of the employee and find out whether it is cast/built by the previous PSU. If cast by the present PSU, whether it makes reference to past services, its continuation, etc. Upon hearing about this, we can determine whether the employee is eligible for gratuity benefits for his past services or not.

I strongly support and agree with Mr. PSDhingra and all other friends, except Mr. Shyam Agarwal. No connection will be counted for one unit to another, and such service periods of two units are different and will not be counted or clubbed for continuity of service as per the provisions of The Payment of Gratuity Act.

Regards,
KIRAN KALE