Can I Claim Gratuity After 6 Years of Continuous Yearly Contracts? Seeking Advice

Worked on a yearly contract, signing an agreement of service for a period of one year each time. I have signed 6 agreements so far without any breaks, resulting in continuous work for 6 years. Can I be considered as an "Employee" for Gratuity purposes? Will signing the contract annually deprive me of Gratuity? The HR department is denying me Gratuity, claiming that since I have signed the contract every year, I am not eligible for Gratuity.
Please advise.

Yes, certainly, you are eligible for gratuity since you have completed more than 5 years of continuous service under the same employer despite the fixed-term contract between the same employer and yourself for every year. Unfortunately, many in the modern HR fraternity form such erroneous views regarding statutory claims only by taking cues from employers with exploitative tendencies and racking their brains to formulate such contracts to circumvent the beneficial provisions of some labor law or another. It would have been better if you could have provided extracts of the contracts. If the fixed-term contract of service was only for a limited period of one year and strictly not renewable thereafter, how was it renewed continuously for six successive years without a break of even a single day? Continuity of service or continuous service is a fact to be determined based on the subsisting substantial employment relationship between the employer and employee without any break over any particular stretch of the period from the beginning to the end. If your HR's contention is accepted, every employer can enter into an annual fixed-term contract of service with every employee he employs and claim that the contract will prevail over the provisions of the Payment of Gratuity Act, 1972, and disentitle the claim for gratuity since he/she signed the contract every year.

Send a notice to the employer for gratuity if you are not in service after the expiry of the last contract, and if it is of no use, file a claim before the Controlling Authority under the Act for the area.

Regards

Thank you very much for your insight on the subject. Every contract signed was for a period of one year (i.e., from 12/07/2010 to 11/07/2011, 12/07/2011 to 11/07/2012, 12/07/2012 to 11/07/2013, 12/07/2013 to 11/07/2014, 12/07/2014 to 11/07/2015, and the final agreement was from 12/07/2015 to 11/07/2016). Every year, a new agreement was signed with a change in remuneration/honorarium only, keeping all the terms and conditions the same. There was no mention of payment of gratuity in any of the agreements. The agreement can be terminated by giving one month's notice by either party. It also states that "The said contract stands terminated on its expiry unless renewed."

After the final agreement, HR informed me that hereafter no new agreement will be made, and my services are not required. I was following the attendance rules and regulations of the company, receiving 28 days of leave, being a member of the employees' group insurance scheme, along with the agreed monthly remuneration. I did not sign any invoice for the services rendered. On my full and final settlement receipt for the last 11 days period (from 01/07/2016 to 11/07/2016), the Date of Joining is stated as 12/07/2010, and the Date of Leaving as 11/07/2016. If you permit me, I will call you, and if I get your email ID over the phone, I can email you my contract copy for your further advice.

Thank you again, and my sincere apologies for disturbing you.

Regards,

Deepak Nayak

[Phone Number Removed For Privacy Reasons], [Phone Number Removed For Privacy Reasons]

Does this agreed-upon term have any implications on the eligibility criteria? Please advise.

Thanks and regards

Mr. Deepak,

I fully agree with the comments of Shri Umakanthan ji, which are absolutely correct in the light of your detailed note. You are eligible for the payment of Gratuity for which you have to approach your employer and the Controlling Authority under the Payment of Gratuity Act, 1972 by filing your application in Form "I".

P K Sharma

Dear Mr. Umakanthan.M,

As required, I have provided the extracts of my agreement for your review. Please assist.

Regards

Well, Deepak, such saving clauses in the contract of fixed-term employment have been purposively included only to baffle the readers. What's important is whether the employee is eligible and entitled to gratuity on termination of his employment as per the contract of employment. If the answer is "YES," such baffling clauses pale into insignificance when the occasion for gratuity arises.

Understanding Employment Contracts and Gratuity

The factum of employment revolves around three basic ingredients: the employer, the employee, and the contract of employment. Once the contract between the parties is established as a contract of service and not a contract for service, the benefits flowing out of the contract become unabatable unless the enabling conditions are absent. So, I reiterate my earlier points. Please go ahead with the formal claim for gratuity.

Thank you very much for your help. I sincerely apologize for bothering you. I am confused and, before approaching the commissioning authority, I need your further help. In my agreement, along with all other clauses pertaining to the remuneration, working hours, leave entitlement, etc., the following two clauses are included. Please tell me whether it is a Contract of Service or Contract for Service and whether I can claim the gratuity.

"And whereas the company has decided to appoint Mr. Deepak Nayak as DGM-IT primarily for the work related to IT services on the terms and conditions agreed upon by Mr. Deepak Nayak." and "The Deputy Manager - IT's duties hereunder shall include acting in such capacity as and when required for any project/site of the company from time to time."

I will be very thankful to you for your kind advice, which will help me decide my future course of action.

Warm Regards