Seeking Advice: How Can I Persuade My Employer to Pay Gratuity for My Fixed-Term Contract?

I am sorry if I am posting something which has already been discussed in the forum. I worked in a company for more than 6 years. I was under a fixed-term contract for two years, renewed immediately upon expiry without any lag of a single day and without full and final payments, etc. I want to write to the company to pay me gratuity as I think I am eligible for it.

Request for Gratuity Payment

Can you help me with some strong points/references/cases that I can include in my letter?

Yes, you are certainly entitled to and eligible for gratuity. There is no necessity to mention strong points or case laws at this stage. Just send a notice as per the Gratuity Rules applicable.

Pertaining to the same subject, given that I am a contract employee, I am not entitled to any TA, DA, and all sorts of funny allowances that companies add to the payslip to cut down on PF payments and the eventual gratuity payment to the employee. So when they say "wages," the company is supposed to take the entire fixed "fee" as the salary, shouldn't it? The manner in which the breakup is made, they strategically ensure that only the ridiculous fancy termed basket of allowances are hiked year after year during appraisals. This was the primary reason for me not having applied for going on payrolls.

However, in the HR policies, it says all employees with highlighted (on roll) in bracket who have worked for a period exceeding five years are entitled to gratuity. I am skeptical that they might point that out to hold back my gratuity. Also, I have heard that the payouts received by people much more tenured than me were abysmally low because there is no DA in the salary breakup and they just got the basic into whatever calculation that comes to.

Questions about Gratuity Eligibility

So my questions here are:

1. Am I eligible for gratuity with no room for any negotiation on that if I have completed over 9 years and 8 months with annual auto-renewal of the contract and absolutely no gap in between?

2. Let's suppose my fixed "fee" with absolutely no further breakup or anything that can be called an "allowance" is Rs 26,000. This makes my daily wage Rs 1,000? And so the gratuity comes out to be Rs 1,50,000? Is this calculation correct, and am I not supposed to accept any other figure below this sum in my FnF as gratuity (if they are honest enough to consider my case for gratuity)?

Dear anonymous friend,

Your narrative is somewhat confusing as you have used the term 'fees' along with the statement, "I am not entitled to TA, DA, and all sorts of funny allowances that companies add to the payslip."

The above statement, combined with your mention of being on a fixed-term contract renewed year after year without any break, raises the question of whether you were a fixed-term contract employee or a retainer on a contract basis. If you were employed on a Fixed Term Contract basis under a contract of service, you are eligible for statutory gratuity based on the total of the basic pay and dearness allowance of the last drawn wages or the entire sum if wages were consolidated.

On the contrary, if you were engaged as a retainer under a contract for service and received compensation as 'fees', you would be ineligible to claim gratuity as you were not an 'employee' but only a contractor.

I regret to mention further that your response in 2022 to my answer given in 2014 also raises the question of whether this is an attempt to verify the accuracy of any quasi-judicial orders dismissing your claim.

No, sir, I don't have any cases going on. I just looked up the subject of gratuity pay on Google, and it led me to this page. The query posted here pertains to the situation I am also in. I have no connection with any other posts here, and this is the first time I am here.

As for the "anonymity," I simply don't want my employer to know at the moment that I am considering quitting, given that annual increments are due. I had to look up what retainership means because I panicked, wondering whether the employer had included something like that in my appointment letter.

Concerns About Terminology Changes

Coming back to the subject, this is what is causing me paranoia, as you have said that terminologies like "fee" are leading to confusion. To clarify, the employer used the term "Consultant" in my previous increment letter. The earlier letter raised my position to the level of manager along with the annual increment. This sudden change in terminologies and the shift from "compensation" to "fee" now makes me wonder whether these changes could be used against me to deprive me of gratuity.

Even on the company's internal telephone directory, until last year, it showed my name and designation as "Manager - Department Name." But now, it shows consultant. I am supposed to work like any other employee, ensure full attendance, be present at the rostered times, and put in extra hours as demanded, just like any other employee.

Employment Terms and Benefits

I personally chose not to take the "payroll" option because the number of deductions under various categories was too high, and back then, my salary was quite low. Besides, there was hardly any difference in treatment between the so-called contract employees and other staff. We are entitled to every facility, including the use of company transport, annual leaves, and using company facilities such as the library and gymnasium. We need to ensure our attendance is marked by punching in our digital ID card. The annual leave policy applies to me. The only difference is that the salary slip has only one header, which is "Fee" for the month, with no breakup and no deductions in PF. Only the TDS of 10% is deducted, which I claim back through IT returns. I am also entitled to the company's mediclaim policy.

Clarification on Gratuity Entitlement

My only purpose in this post was to verify if the company could misuse terminologies like "consultant" and "fee" to deprive me of my gratuity. From your response, what I understand is that under the circumstances of me not being an expert just called in as per needs, like a "guest appearance" in a film, I am entitled to full gratuity. The sum of all wages, considering I do not have any sub-headers like HRA, Travel Allowance, or Festival Allowance, will be taken as "wages" for the calculation of gratuity.

I hope this helps clarify my situation.

It appears from your post that you are planning to leave the organization and have doubts regarding the payment of gratuity after your departure, as you are eligible for it.

Documents to Prepare

Please keep all the documents handy (different designations at different times, including documents in the internal telephone directory). Just giving one designation as Consultant but asking to do daily routine work like other employees will not be sufficient to deprive you of payment of gratuity.

Steps to Take if Gratuity is Not Paid

If the organization does not pay you gratuity in the future, please approach the controlling authority under the PG Act and explain your position with all documents. In my opinion, the ruling will be in your favor.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity

Exactly what I feared has taken place. The most recent changes made to designations and the latest extension letter issued in 2022 contain a one-liner on the second page stating that you are not eligible for any statutory benefits as you are an independent contractor only. When I asked whether I should fill out the gratuity form with the clearance form, I was called on WhatsApp and informed that I can't avail any statutory benefits. I heard from someone that whenever someone calls on WhatsApp, they do not want their call to be recorded. I emailed the head of HR, to which she didn’t reply. I later texted her, and she called me on WhatsApp, just like the other HR employee, and said that until the COSS is implemented, contract employees are not eligible for gratuity. I immediately raised this concern with the person marked as the chairperson of the company’s internal grievance cell. There was no answer to it either.

After 20 days (the policy states that grievances are answered in 20 days), I sent a reminder to her again. By now, the last working date had passed. This time, I received a nasty, lengthy email from the company’s legal team asking why, over the past 10 years, I never questioned why I was not marked as an employee and never complained that my role wasn’t of an "independent contractor" but rather a "master-servant" relationship. They repeatedly pointed out that I signed the extension document in 2022, which mentions I am not eligible for statutory benefits, and therefore, this is an attempt to extort money from the company. I responded, saying this is rubbish because the hiring manager only wanted a full-time worker, and if human resources hired an independent contractor, they have hoodwinked not just the recruit but the manager of the department as well. I also specified that even if I were to accept this clause that I didn’t even read while signing, which explicitly denies me statutory benefits, it would be applicable from June 2022 only and not retrospectively because none of the earlier documents had this sentence. To this, the person whom the company’s internal policy documents called the "Chairperson" of the grievance committee replied to all, saying she has not been part of any grievance committee.

So, we can see clearly that all the management-level employees wish to stay clear of this just in case a lawsuit is filed against them and therefore got their lawyer to do the dirty job. How should I proceed here? Will just filing an appeal with the ALC suffice, or does a legal recourse have to be pursued? I am pretty sure that the company, a media organization, will have friends among the bureaucrat circles and they can arm-twist anyone.