Can My Time at the Old Company Count Towards Gratuity with the Same Management?

Hi Everyone, I worked at company A from July 2010, and in March 2012, they registered a new company named B, and all the employees were shifted to company B. They provided us with a new offer letter for company B and a relieving letter for company A. I have now resigned from company B (in Nov 2017), and my total tenure in company B was 5.8 years.

Gratuity Calculation Query

My question is, if the management and location remained the same, can my 20-month tenure at company A be considered when calculating gratuity, or will my tenure be considered as 5.8 years?

Thanks

Ideally, you should receive a gratuity. However, you need to check your transition process from Company A to Company B.

Thank you.

Circumstances would have to be examined. Prima facie, from what you have described, gratuity is payable by the company.

Employer cannot get away from liability by closing one company and restarting business in another name and re-employing the same people.

I beg to differ from the views of the two members who answered just before me, though their views have inherent ethical value. But, legally speaking, both companies are different entities despite the continuity of ownership in any form.

As per the post, all the employees, including the poster, resigned from Company A in response to the offer from Company B. Therefore, it cannot be treated as a transfer of service from one company to another with continuity of service. If they have any claim for gratuity against Company A, it actually depends on the length of continuous service rendered there on the date of their resignation.

Regarding the query of the poster who stands resigned as of now from Company B also, he can stake his claim for gratuity only for the period of his service actually rendered in Company B and cannot club the service rendered in Company A.

Technically, you cannot combine the service in company 'A' with that of company 'B' for reasons explained by Mr. Umakanthan. However, ethically, the company can consider it and compensate for the past service as the management is the same in the form of 'ex-gratia'. However, it is the company's discretion.

B. Saikumar
HR & Labour Relations Advisor
Navi Mumbai

"all the employees are got shifted to company B. They give us new offer letter for company B and relieving letter for company A"

Uma sir,

The employees never resigned from Company A. They were shifted to Company B. It appears that the closure of Company A and the establishment of Company B with the same business and staff could be a way to avoid paying gratuity, among other potential reasons. The facts provided are insufficient to make a definitive judgment, but based on the assumption mentioned above, this is my opinion.

Yes, Mr. Rao, I certainly agree that based on the bare facts casually presented by the poster, your perception would also be correct under the provisions of S.25-FF of the Industrial Disputes Act, 1947, pertaining to the compensation of workmen in case of the transfer of undertakings. At times, however educated, our Indian employees, in order to keep things going smoothly, are susceptible to the manipulative tendencies of their employers. That's why most of us insist that posters should always provide complete details of the problem for which they seek a solution. Now, it is up to the questioner to respond.

Receiving full and final settlement means severing the employer-employee relationship. Gratuity is paid for continuous service of 5 or more years, which you do not have.

If an employee has continuous service in two different companies under the same management (transferred from company A to B), will he be eligible for gratuity for the continuous service?

Please provide your reply.

Service Period of Company A may not be considered for Gratuity unless there is documentary evidence to prove that the period served in Company A will be considered for gratuity for all those who have been reappointed in the new company B from Company A.

It thus means that the proper procedure of transfer and compensation has to be documented in employee personal records and company records too.

Section 25FF of The Industrial Disputes Act, 1947

Section 25FF of The Industrial Disputes Act, 1947, states the compensation entitlement of workmen in case of transfer of undertakings. When the ownership or management of an undertaking is transferred to a new employer, workmen with a minimum of one year of continuous service before the transfer are entitled to notice and compensation as per section 25F, similar to retrenchment. However, certain conditions must be met for this provision to apply:

(a) The workman's service has not been interrupted by the transfer.
(b) The terms and conditions of service post-transfer are not less favorable than before.
(c) The new employer is legally liable to pay compensation in case of retrenchment, considering the continuous service of the workman.

Further details are required from the querist to provide a specific answer. If such transfers are conducted by management to evade liabilities, the law will likely favor the employee.

Yes, Sir. Section 25FF is applicable provided that such notices should have been issued. That is what I meant by writing that the relevant procedure should have been followed and documented to ensure the welfare of the employee in question.

Thanks for sharing the in-detail frame of this issue, Sir.