Am I Eligible for Gratuity After Moving Between Group Companies with Shared Directors?

Eligibility for Gratuity

Worked in a company for 3.5 years; the date of joining was 11 March 2013, and I was relieved on 30th September 2016 (the company had only 4 employees).

Joined the group company on 1st October 2016 and will be relieved on 31st March 2020. Both companies have two common directors. Will I be eligible for gratuity? The last drawn basic salary is 50,000 per month. The current company has more than 10 employees.

For both companies, the employee had the same email ID and official mobile number. The case is of Haryana state.

Applicability of the Payment of Gratuity Act

The Payment of Gratuity Act applies to every factory, plantation, oil field, or mine without reference to the number of employees employed. Therefore, if your establishment is not a shop or a commercial establishment, there is no confusion regarding your eligibility. The requirement of ten persons applies only to shops and commercial establishments.

Eligibility for Gratuity in Group Companies

If it is possible to establish that both companies are owned by the same directors with financial integrality or transfer of funds from one company to another, you will be eligible for gratuity. This applies even if your old company is considered the same as the new company under the Payment of Gratuity Act right when you joined. For the purpose of eligibility, your total service would be considered. It is not necessary that you should have five years in the second company of the same management.

At the time of leaving, if your company is covered by the Gratuity Act, what matters is whether you had joined five years back. It is not necessary that at the time of your joining the company, the company should be covered by the Payment of Gratuity Act. What is important is that you have to establish that both companies are one and the same. The use of the same mobile number and email ID even after joining the second company is proof to show that both companies are one and the same. Similarly, you have to collect other information, like the transfer of funds for payment of salaries, purchase bills, accounting of one purchase in one company and then transferring the same to another company by a book entry, etc.