Gratuity for Contractual Workers: Who Should Bear the Responsibility, Employer or Contractor?

Gratuity Act for Contractual Employees

I seek your guidance regarding the provisions of the Gratuity Act for contractual employees. A is a contractual employee/workman deputed in Company B by his/her contractor. He serves Company B for 5 years or more (as required for Gratuity). Are there any statutory obligations that Company B, being the principal employer, should have Gratuity liability for the services rendered? Or should it be borne by the contractor?

I am seeking your valuable comments and inputs regarding the same.

Regards,
Subhajit Dasgupta

Dear Subhajit,

In case of a failure to pay any dues to any employees or government authority by the contractor, then all liability comes on the principal employer. The principal employer can then force the contractor to pay, or the principal employer can pay the same directly and recover the amount from the contractor's invoice.

Regards,
Tushar Swar