Dear John,
Large industrial houses have many separate companies which are legal entities. On need basis management transfers employees from one company to the other. In many cases the employee is required to resign from the Ist company and gets a fresh appointment letter while joining the next company within the same Group. Every time the employee changes the payroll of Group Companies, his full and final settlement is done from the company from where he exits. In this regard two types of practices are there on ground:
1. Gratuity is not transferred from one company to the next. If the employee has completed 5 years of service on the rolls of one company. He gets gratuity along with his F&F. If his service is less than 5 years he is not entitled for any gratuity.
2. Some Groups follow the practice of carrying forward Gratuity and Leave accumulation. In this case the appointment letter issued by the next company in the Group has a sentence like this - "for the purpose of gratuity and any other long term terminal benefits, your service will be treated as continuous from ................ (Date of joining the first company)"
In the case mentioned by you, if this kind of a clause is there in appointment letters issued to him by ubsequent companies, then the concerned employee is eligible for gratuity. If such a clause is not there then he is not eligible for gratuity.
Secondly gratuity is to be paid to the employee by his last employer company in the Group. For accounting purposes every time the employee changes the payroll, pro-rata gratuity amount is transferred by the relieving company to the appointing company.
I hope this answers your query.
Best Wishes,
Indu Wadhwa
Aspiring People
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