Understanding Gratuity Entitlement for Contract Employees in PSUs

I am working in a PSU. I was initially appointed in November 1984 on a contract basis for one year, then got extended on the expiry of each term without giving any break. This continued until August 1990 where I was absorbed into the regular cadre of the PSU before the expiry of my contract (the contract was to expire in August 1990, but I was regularized on 1st August 1990).

Now, I am about to retire, and the P&A of this PSU says that I will not get gratuity for my contract period, i.e., from November 1984 to August 1990, although I have been in continuous service with this PSU for more than 5 years without any break. The P&A of this PSU states that as per the gratuity scheme/rule, contract employees of this PSU are not eligible for gratuity. Moreover, gratuity is not mentioned in the original contract appointment letter.

Kindly let me know whether a PSU can have its own gratuity rule. Is it mandatory for a PSU to follow the Gratuity Act 1972 and its subsequent amendments? I was serving as a contract employee, not as an apprentice, and for this reason, the P&A of this PSU should count my gratuity from my initial contractual employment. Kindly let me know your valuable advice and suggestions. Thank you.

The contention of the management is wrong. The mode of employment of an employee is inconsequential as long as his service remains uninterrupted as per the provisions of the Payment of Gratuity Act. Just because it happens to be a PSU, neither its rules and regulations have any legal force nor can they run counter to the provisions of a statute like the Payment of Gratuity Act, 1972, which in itself is a complete code on the subject matter of gratuity for industrial employees.

It is advisable to accept whatever gratuity is paid by the PSU and then file a claim for gratuity for the remaining period of service with interest before the Controlling Authority under the Act.

As advised, I also suggest you to get the gratuity amount that your company is paying first. Thereafter, you can file a claim for the outstanding amount.

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