Daily Wage Workers and Gratuity: Do Long-Term Breaks Affect Their Eligibility?

In our organization, we employ daily wage workers, many of whom have been working for several years with breaks in service of almost 2 months and 1 month. Does the payment of gratuity apply to them?

Thank you.

Dear Member,

Please consider the following links to discussions on the current topic of interest to you:
- https://www.citehr.com/174408-contin...-gratuity.html
- https://www.citehr.com/435270-gratui...-employee.html
- https://www.citehr.com/487796-gratui...ce-period.html

You could further search the website for information useful to you. I believe this will help you in finding answers soon.

Best regards,
Citelegal

Thank you for the reply. I could get a better picture from these links. However, I have one query. These employees are not on our payroll. We have permanent employees as per our authorization. In addition, we have employed these daily wagers who have been working with the institute for many years. Some of them work throughout the year without taking any breaks, while others are sent on compulsory breaks of two months or one month. Are these people eligible for gratuity?

Eligibility for Gratuity for Daily Wage Workers

The mode or periodicity of payment of wages does not alter the employer-employee relationship as long as there is regularity of employment. What is important is that to be eligible to claim gratuity from the employer, the employee, irrespective of their employment status such as permanent, temporary, casual, etc., should have completed not less than five years of continuous service under the same employer. To be entitled to gratuity, the employee should have completed 240 days of continuous service in every year as defined under section 2-A of the Payment of Gratuity Act, 1972.

The breaks in service repeatedly mentioned in your posts might not be due to the fault of the employees but could have been intentionally given by the management to show discontinuity in their services. Moreover, as these breaks range from only one to two months in every year, they cannot reduce the 240 days of continuous service in such years. Therefore, if the Payment of Gratuity Act, 1972 is applicable to the establishment, daily wagers are eligible for gratuity upon the termination of their employment.

Thank you.

Umakanthan Sir has rightly said that 240 days of continuous services are required for five years in a row to be entitled to gratuity. If the employer has given breaks, but even then, if the days of service in a year are 240, for five continuous years, then gratuity will be applicable.

Dear friend,

One should complete continuous service of 5 years. Continuous service means working 240 days in a calendar year. Any break in service cannot be treated as continuous service.

Dear Ankur, Before addressing the three questions you have raised, I would like to discuss certain aspects/ingredients of the concept of employment of labor in order to differentiate it from the engagement of labor. Engaging labor for specific work implies a service contract between the person seeking the services and the individual performing the work, either personally or through a third party, for monetary compensation. Once the work is completed and payment made, the contract concludes. This relationship is temporary and entails no additional rights or obligations beyond what was agreed upon.

Employment vs. Engagement of Labor

On the other hand, employment involves the employer, employee, and the employment contract. The employment contract, whether explicit or implicit, establishes a lasting relationship between the employer and employee through mutually agreed-upon terms and obligations. In a Welfare State, the laissez-faire policy is replaced by the government's regulation of employment through labor legislation. These laws can amend existing employment contracts or introduce new ones through their regulatory authority.

Addressing Your Questions

Now, in this context, I will address your questions as follows:

1) Your construction site falls under the purview of the Building and Other Construction Workers' (Regulation of Employment and Conditions of Service) Act, 1996.

2) One interpretation of the term "casual" is irregular or non-permanent. When used to describe "casual labor," it refers to workers employed on a temporary or irregular basis. The focus is on the manner of employment rather than the nature of the job. Since the appointment is temporary, formalities regarding joining or leaving employment are not significant.

3) Analyzing the definitions of employee, wages, and contributions in the ESI Act, 1948, and the EPF Act, 1952, reveals no distinction based on the regularity of employment. Contributions are calculated based on wages earned, requiring periodic remittance without exemptions for casual labor. Keeping track of attendance and calculating wages for the days worked minimizes compliance difficulties. Casual employees automatically qualify for the rights and benefits under applicable labor laws based on meeting stipulated conditions.

I hope this clarifies the distinctions and answers your questions effectively.

Best regards

Dear Umakanthan Sir,

If no joining formalities need to be processed in the case of casual labor, is there any defined period of employment for casual laborers? For example, casual workers may be restricted from working more than a certain number of days or months, such as 10 days or 15 days. If any worker exceeds this defined period, would they be deemed as regular workers?

Is there any such stipulated period in place?

May I request you to reread my reply on the concept of casual employment or temporary engagement of labor in contrast to the concept of regular employment? When the engagement of labor is factually irregular, intermittent, or occasional, how can it be precisely defined with reference to periodicity? Periodicity is essentially marked by the element of regularity in intervals. That's why section 25-B(1) of the Industrial Disputes Act introduces a legal fiction in defining the term "continuous service" as a period of uninterrupted service that may be interrupted due to certain happenings not attributable to the fault of the workman. When a workman is not in continuous service within the generality of the meaning of ss(1), ss(2) of sec.25-B demands the computation in absolute numbers of 240 days in a period of the preceding 12 months or 120 days in a period of the preceding six months. It is better you read the entire section 25-B for further details.