Gratuity for Contract Workers: Can Service Years Add Up Across Different Employers?

Dear HR Experts,

Is there any judgment on the payment of Gratuity by the Principal Employer in respect of contract labour working with different contractors for different periods, each less than 5 years of service with each contractor but totaling more than 10 years of service overall?

Kindly advise and share any judgments.

Thanks,
Gaurav

As per legal view, when the contract is over, the contract employee loses their service period with the particular contractor (immediate employer) where the F&F has been made immediately to the workers. Thereafter, he can join another contractor and continue his service from the beginning only.

There was a judgment by the Supreme Court regarding gratuity payable to loading/unloading workers in Chennai where the court ruled that gratuity was payable though the gangs worked under different contractors during the period. It was a 1985 case that took 12 years to get the final judgment.

I do not have the link; you need to search for it.

Dear Seniors,

Kindly enlighten me on the ways in which GRATUITY PAYMENT can be curtailed for contract laborers if the principal employer is required to engage them for a longer period.

Regards,
Gaurav

Personally, I am disgusted with the approach HR managers and employers are taking to avoid their social and legal responsibilities regarding statutory benefits for the lowest level of workers. Gratuity amounts to 4.5% of the annual pay of a worker. If that is set aside in a gratuity fund and paid from it, this does not even disrupt cash flow. This is 4.5% of minimum wages in most cases. Still, you want to deny the worker his right in the form of a small amount that would help him save some money.

The only way you can do it is to give breaks in service so that it does not amount to continuous service. However, the Supreme Court has already, in some cases, disregarded the service breaks where it was shown to have been specifically designated to deny gratuity.