Am I Eligible for Gratuity After Being Shifted to a Sister Company?

I have been working in a company since May 2007, but in April 2010, they shifted some of their employees to one of their sister concerns. Now, I want to leave this company after completing my 5 years. Am I eligible to receive gratuity? The staff remained the same, the directors are the same, and most of us are working for both companies. Both companies are running under one roof. Please help me.

The facts (though limited) you have furnished indicate that both are sister concerns existing under one roof, owned by the same directors, and employees are working for both concerns. Additionally, there is movement of employees from one concern to another, suggesting that both establishments constitute one entity. Therefore, the service in another sister concern shall be included to compute the five-year period. Consequently, you will be eligible for gratuity.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Yes, Priya, gratuity is applicable. As my learned friend Mr. Saikumar has indicated, the companies fall under the same establishment; it is one company. Furthermore, the company itself has changed your branch of working. The company is linked with the main company, so gratuity applies.

However, it doesn't apply if the companies are entirely different but fall under the same umbrella brand, like UB Breweries and Kingfisher Airlines.

If the companies are linked together and hold themselves as different establishments/entities, they will be treated as different companies. Unless customized by the company through its policy, which is a very rare exception.

Thank you, sirs. One more thing, does the notice period also count towards completing the 5 years? For example, does the day you submit your resignation play a role? For instance, if you submit your resignation 6 days before completing your 5 years, then...

As per the Gratuity Act, the organization should consider the notice period until they relieve you from the job. Therefore, the notice period must also count towards the gratuity.

Thanking You,
Venkat.

The notice period will also count when calculating the eligibility period under the Gratuity Act. Please note that you will be eligible for gratuity after completing 4 years and 8 months of continuous service, which includes the time spent in the service of the sister concern of the company. 4 years and 8 months are considered as 5 years of continuous service. Therefore, if you have completed this time or more, you are already eligible.

Yes, as Kamal Kant and HR Venkat explained, the notice period shall also count for calculating the continuous service of five years or more, since the employee-employer relationship continues until the expiry of the notice period or the date of relieving.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Please contact the labor commissioner of your area. They are the authority under the act. They will ensure that you receive your Gratuity amount with ease, as well as other necessary items like your experience letter, your full and final settlement, or any other documents required from your employer. Don't worry; what is rightfully yours cannot be taken from you.

I am in doubt they may ask me a question like, "You were not there in the same company." However, as I mentioned earlier, only the name of the company has changed; everything else remained the same.

Presently, I am drawing a basic salary of 14,200. According to this, I am liable to receive around 40,961 Rs. Is the calculation correct?

Just one question... Did they take any resignation letter from you before they asked you to work for the new company? If they had taken any such letter and issued a new letter giving you some break of a few days, it may be difficult to fight. Some groups have this habit of taking a resignation letter, settling all accounts including leave encashment before they ask an employee to take an assignment in their sister company. Otherwise, you have a good chance, and you can file a petition before the Payment of Gratuity Authority.

Regards,
Sivasankaran

Luckily, no, they haven't taken any resignation letters. Only a transfer letter was provided to all the employees whom they shifted, and that too on the letterhead of the previous company. The thing is, I have withdrawn the PF from my last company since they were not transferring the PF to the new company. The details of the PF account of the new company do not appear on the internet at all. In fact, none of the employees who have left the new company have received their PF yet. Either the forms are rejected, or there is no news at all. The HR of the last company instructed us to mention the reason for leaving as "Resigned" in the PF form. Will that create any problems?

If they have issued a letter of transfer, it is an indication of continuity of employment. Approach them, and if they agree, the matter ends. Otherwise, claiming through the Gratuity Authority is okay. You may need some help from an advocate.

Regards,
Sivasankaran