Am I Eligible for Gratuity After Being Transferred Abroad? Seeking Advice on Legal Options

Hello Friends,

I am sure this question has been asked by many people in the past, but I couldn't see any definite reply. Hence, I am posting it again as it is crucial for me to understand whether I am eligible for Gratuity or not:

Eligibility for Gratuity

I have been working for an IT firm since March 2005. The same firm transferred me to their parent office in the USA in February 2008. Though my payroll has shifted, I am still counted as part of the India branch. Therefore, my performance appraisal and all HR coordination happen through India. My India employee code is still intact, and I receive tax-related communication from our finance department, including Form 16 every year, though the tax is always zero. Now, I am planning to resign here in the USA, and I am not sure whether I will be eligible for gratuity or not.

Please advise. If my company denies it, can I take this matter to an Indian court? If yes, what are the chances for me to win this case?

PS: In IT firms, these movements are quite frequent. Employers send us to client locations and expect us to manage their business from abroad. Finally, when an employee leaves the organization, they don't get the advantage of social security in any country.

Thanks in advance.

Regards

Dear Vivekbat, when you receive Form 16 every year from the same company, it is evident that you are in continuous service even if you are working elsewhere on behalf of the same company. Please read the following and determine for yourself whether you are eligible or not.

Payment of Gratuity

4. (1) Gratuity shall be payable to an employee upon the termination of his employment after he has rendered continuous service for not less than five years:
- (a) on his superannuation, or
- (b) on his retirement or resignation, or
- (c) on his death or disablement due to accident or disease:

[(c) “continuous service” means continuous service as defined in section 2A;]

Definition of Continuous Service

2A. For the purposes of this Act:
(1) An employee shall be deemed to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing order, rules, or regulations governing the employees of the establishment), layoff, strike, or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.

I hope this clarifies your doubt.

Regards,
KIRAN KALE

Kindly note that gratuity is applicable to employees working continuously for 5 full calendar years. However, one condition applies: your employment should be with the same organization. If you were transferred to another firm in the USA, please ensure that the director or owner remains the same, even if the company name is unchanged.

Regards

Dear Vivekbat,

The inputs provided by Kiran Kale are quite valid with the following considerations:

Employment Termination and Reappointment

Is your employment terminated in India while considering your employment in the US? Are you reappointed in the US? If you are reappointed in the US, then the service that you render in India shall not be accountable. As the company is a separate entity, it shall not have relevance with the owner—if the interpretation for the owner is an individual in the above perspective.

FORM 16 and Service Confirmation

FORM 16 is only a declaration regarding the income earned by you in India in that firm but shall not essentially confirm your service. You need to take an expert opinion in this regard.

Calculation of Years of Service

For the purpose of the calculation of years of service, any fractions in the year shall be considered as follows: if the duration is 6 months or below, then it is not considered a completed year of service. If the duration is above 6 months, then it is considered a completed year of service.

Cheers and Regards,

PN Narayana Vyas

Thank you for the advice. Please note that my employment has never been terminated in India, and I have never received any reappointment letter in the US. This means that I have been transferred for an assignment, and my performance evaluation still occurs in India. In fact, my resignation formalities are also being coordinated by the HR team in India. Typically, an employee in such a situation should return to their home office. However, since I am joining a firm in the US, my relieving letter will be sent to my US address.

I have some doubts because I read somewhere that one needs to earn in India and have an active PF account. However, in my case, my salary is paid in the US by the host country, and I have not submitted any PF contributions in the past 3 years. Despite this, my PF account remains active, and the interest continues to accumulate. I have two employee codes, both of which are linked – my US employee code is connected with my India employee code at the backend, and both codes are active.

Typically, individuals like us who have come on a transfer return after completing our assignment. However, I am unsure about the Gratuity rules in such a situation. Do they consider individuals in transfer cases, who are being paid in a foreign country, eligible for gratuity or not?

Thank you,

Vivek