Am I Eligible for Gratuity After Transferring Back to the US from India?

Here is my case: I started in the USA for a company ABC INC on 21st January 2008. In 2011, I was transferred to the India entity of ABC INC, which is ABC India Pvt Ltd. I came to India and started working from 8th February 2011 (but was on US payroll till May 31st, 2011). My India Payroll started from June 1st, 2011. Now I am being transferred back to the same US company on September 1st. Will I be eligible for gratuity? Should I resign before leaving, or should I wait?

I am not aware of the U.S. legal provisions relating to gratuity for employees. Since your transfer from ABC INC to its Indian counterpart, ABC INDIA Pvt. Ltd., and back shows that you are an employee of the U.S. undertaking, your entitlement to gratuity depends on any U.S. laws relating to gratuity and the terms of the contract between the two companies regarding the transfer of employees between them.

Hi,

Does both the company fall under the same management? Or is the Indian Company a subsidiary of the US Company?

Yes, it's the same management. I was offered a new job letter in India with an Indian salary here in 2011.

Its subsidiary with common directors of Pvt Ltd and INC. Management is the same as well. I am talking about gratuity as per Indian law. I had an offer letter from the Indian entity when I came back.

Please let me know what you think.

Hi,

As per Indian law, if you complete 5 years of continuous service, you will be eligible for gratuity. Since you have been on the Indian payroll since 2011, you have to continue your service until June 2016 to be eligible for it.

Thank you

Legally, you became an employee in India on June 11 and were transferred in September 15. That is less than 5 years of service, so the Gratuity Act will not be applicable in your case.

You will be eligible for gratuity in India only if you worked for not less than five years under it in India.

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Understanding Gratuity Eligibility for International Transfers

Presumably, your appointment/transfer order should detail the terms and conditions of your service benefits, compensation package, etc. Your case is unique, as you have served in various locations with different entities across different countries. Indian laws are applicable only within India, and I don't think you'll find relevant information in these legislations. Even if we assume that your entire service was in India, it is unlikely that you would be eligible for a gratuity payment under the Payment of Gratuity Act, as I believe your emoluments could easily exceed the limits set by the Act.

I suggest that instead of seeking opinions here, you should address this issue to them, discuss it with your HR contact who managed your career, or seek advice from colleagues who have left under similar circumstances. I have nothing specific to recommend regarding whether you should continue or quit based solely on the gratuity aspect. There are other crucial factors to consider as well. Perhaps the period (1.6.2011 to 1.9.2011?) during which you worked in India with an Indian-incorporated company could have some bearing on this issue, as I doubt whether you completed the qualifying service as per the PGA. Hopefully, some clarity will emerge when you inquire with your employers in India and the US.

No. The Gratuity Act applies only to Indian companies. Since you have not worked for 5 years in an Indian company, you will not be entitled to gratuity legally. However, your company, as a good employer, can make an exception to this policy.