Am I Eligible for Gratuity After 1 Year on Contract and 4 Years as a Permanent Employee?

Hi,

Can anybody please help me with the following scenario? I worked in a company for 1 year on a contract basis (on the payroll of another company). After that, the company made me a permanent employee on its own payroll. I have now completed 4 years as a permanent employee (on the company's payroll) in addition to 1 year of contract service. I wanted to know if I am eligible for gratuity or not.

Thanks!

To claim gratuity, one should continuously serve a minimum of 4 complete years and 240 days.

If you can establish a continuity of service from contract to permanent status (date of cessation on contract employment and entry as a permanent cadre), most likely you have a case, and you raise your claim before the Authority under the Payment of Gratuity Act.

Establishing a Sham Contract

If you can establish that during the first year, when you were off the rolls, there was direct reporting by you to the principal employer, you were directly controlled by the principal employer, and your performance was assessed by the principal employer, then there is a possibility that the contract could be treated as a sham contract.

Once a contract becomes a sham, there is a possibility that you would gain the status of a regular employee. However, the onus to prove that the contract was a sham lies solely on you.

Dear colleague,

To be eligible for gratuity, one should have completed 5 years of uninterrupted continuous service. Based on your terms of appointment, both as a contract and so-called permanent employee, if it was clearly stated that you are granted continuity of service, then very likely you may be eligible for gratuity on cessation of employment.

Regards,
Vinayak Nagarkar
HR Consultant