Am I Still Eligible for Gratuity After a "New Employment Contract" with No Service Break?

Hello, I joined an organization in 2010 and was confirmed in 2011. In 2012, I got an opportunity from a new employer, so I resigned from my position. However, the company management decided to retain me by offering a competitive salary but termed it as a "New employment contract." There was no paperwork done for this, and I was just given an appraisal letter at that time.

1) My resignation was not accepted at that time.
2) I was asked to revoke my resignation.
3) There was no break in service.
4) There was no break in salary payout.
5) Full and Final (FNF) settlement was not done at that time.
6) The top management remained the same from 2010 till 2016.

I continued to work with the organization until 2016, when I finally resigned and FNF was done (without payment of gratuity). Now, when I am claiming the gratuity, they are saying that I am not eligible for it as I was re-hired.

Could you please tell me if I am eligible for gratuity? Also, will the "New employment" contract be termed as a break in service, even though I worked with the same organization for six continuous years?

Thanks,
Nikhil Gupta

What is discernible to me from your post is that in no way has the so-called "New Employment Contract" altered or affected your continuity of service under the same employer. Therefore, your entitlement to gratuity commences from the date of your initial appointment in the establishment, and it remains unaffected despite the subsequent new contract, which actually modified only one of the service conditions, namely the compensation package. This modification was made as a bait to retain your services in the same employer's interest. You can make a successful claim for gratuity for your entire service.

Thank you for your valuable comment on this post. Could you please explain what constitutes "continuity of service" or "continuous service" as per the Gratuity Act? It is difficult to interpret and comprehend.

Also, suppose we say there was actually a "New Employment Contract" in my case, does that break my continuous service to the organization?

In light of the above scenario, here are a few facts along with the facts stated above:

1) Employee ID remained the same.
2) PPF Account remained the same.

Thanks,
Regards,
Nikhil Gupta

As the ACL (Retd), Sri Umakanthan Sir mentioned, you are entitled to Gratuity Payment as per the Act, as there was no break in service according to the data provided in points 1 to 6. You may proceed to claim Gratuity in Form "I." When calculating the Gratuity payment, consider the last drawn wages, which include the salary components of Basic + DA or the Consolidated Salary, as applicable.

Wait for some time. If there is no response from them, you may file a complaint petition before the Controlling Authority under the PG Act in the Labour Department of the jurisdiction of your employer to seek a suitable remedy.

Regards,

Dear all,

Please read the definition of continuous service under the act. An employee who completes 190 days of service in a 5-day-week organization and 240 days in a 6-day-week organization completes one year of service.

The term "continuous service" is defined in Section 2-A of the Payment of Gratuity Act, 1972, and not the term "continuity of service." Hence, we have to interpret the latter term in its literal sense only. In my opinion, and in the context of employment, it would mean the possibility of considering an employee's service as continuous from their entry into service until their exit at a stretch.

Understanding Continuous Service

Continuous service of an employee refers to the length of service over a period that includes the days they actually worked and the days of their absence, which are to be notionally treated as worked days.

Understanding Continuity of Service

Continuity of service, on the contrary, is the fact of the subsistence of the contract of employment in a consecutive manner from initial appointment to termination, despite material changes or modifications in its terms. In your case, the employer increased your salary on their own to retain you in service. How can this be a new contract so as to nullify the service rendered before? This is only an attempt to discourage you from filing a statutory claim for gratuity. So, don't be baffled by such blabbering from your employer.

Regards,
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