Gratuity for Contract Employees in Telecom: Who's Responsible for Payment?

Hi seniors, I am working in the Telecom Industry as AM-HR. I want to know about the gratuity payment for contract employees.

Gratuity payment for contract employees

Our 21 workers were working with the first contract employer (manpower agency) from 2008 to 2012. The employees resigned and joined another contract employer—a manpower consultant—from 2012 to 2014. In 2014, we engaged with a new contractor on a work contract with the same employees from 2014 to 2017. In this situation, no employee worked with the same employer for more than 5 years. Please suggest the scope of the payment of gratuity and how it affects the principal employer. Who will be responsible for the gratuity payment?

Regards, Jijo Mathew

Dear colleague,

It is the responsibility of the Contractor to pay Gratuity in the first place to all his eligible employees, i.e., to those who have 5+ years of service after they cease to be in employment. In case the Contractor fails to pay, it is the responsibility of the principal employer who can recover from the Contractor from his dues.

Regards,
Vinayak Nagarkar
HR Consultant

Dear Jijo, Knowingly or unknowingly, you've admitted the fact that you are changing contractors but retaining the same contract workmen, which would certainly render the contract as a sham one. In such a situation, your argument that no employee has completed 5 years of service under the same contractor to claim gratuity pales into insignificance as they are engaged only for the same P.E. Certainly, the contractor would have included his monetary liability towards payment of gratuity in his charges. Either avoid such a practice of rotating the same contract labor among the successive contractors, or ensure each contract covers a period of more than 5 years so that upon termination of that contract, the particular set of contract labor engaged therein are paid their gratuity.