Gratuity Dilemma: Can Employees Claim Benefits from Unregistered Proprietorship Firms?

Gratuity Eligibility for Unregistered Proprietorship Firms

The query is regarding a proprietorship firm that is not registered for gratuity and has not paid it to any of its retired or resigned employees, even though they have served for more than five years. Essentially, no one has claimed gratuity because they were unaware of their eligibility. Now, one employee has retired after serving the company for 17 years and has claimed gratuity.

The question is whether the employee is eligible for gratuity. If the answer is yes, who will pay it, and how will it be paid since the employer is not registered? Can those employees who left about a year ago also claim gratuity?

Thanks & regards

There is no question of registration since there is no authority where you have to register. The employer will have to pay. If the past employees claim, they will also have to be paid by the employer.

Applicability of the Payment of Gratuity Act

The applicability of the Payment of Gratuity Act depends on the nature of the activity carried out by the establishment. If the establishment is a factory, plantation, oil field, or mine, the Act will be applicable without considering the number of employees. On the other hand, if it is an establishment covered under the Shops and Commercial Establishments Act, there should be a minimum of 10 employees for the Payment of Gratuity Act to apply to it.

Regards, Madhu.T.K