Am I Still Eligible for Gratuity After 11 Years with Changes in State Labor Laws?

I have been working for an organization for the last 11 years. Could you please clarify whether I will be eligible for gratuity or not, considering that various states, including Uttar Pradesh, have suspended labor laws, including the Gratuity Payment Act of 1972?

As per the provisions of the Payment of Gratuity Act, 1972, you are entitled to receive a gratuity payment upon resignation, termination, or retirement.

Dear Mr. Nair, I am planning to resign, but I am afraid that the UP government has suspended labor laws for 3 years. I hope you are aware of this. I actually want to know what this suspension means. Do I stand to lose my gratuity for the past 11 years? I would appreciate an elaborated reply from you.

Dear Nitin-Jain, my advice to you is to hold on to your plan of resigning in the current situation. This is not the right time to make any changes. We are all passing through a very uncertain time due to the COVID-19 pandemic, which has had a great impact everywhere. The economic and industrial activity has come to a standstill. Under these circumstances, it would not be a wise decision to quit a stable job of 11 years and jump into uncertainty unless you have some serious issues with your current employer that you cannot resolve.

Ordinance by the UP Government suspending labor laws

Now, moving on to the Ordinance by the UP Government suspending the labor laws for 3 years. This Ordinance applies to all factories and establishments engaged in the manufacturing process. It is not clear from your post whether you are engaged in the manufacturing process or not.

I am really confused about this Ordinance and its impacts. It will take some time to understand the implications of this Ordinance for people like me.

Although the labor laws have been suspended for three years by this Ordinance, what I believe is that your payment of gratuity, which is the reward for your long service, is protected. However, the date of payment may be deferred for three years.

Kind regards, [Your Name]

Clarification on Labor Law Suspension in Uttar Pradesh

I would like to inform you that although the UP Government has issued an ordinance approved by the Governor of U.P., since labor laws are in the Concurrent List, any amendment requires the assent of the President. The ordinance was sent to the President for his assent, but it has not been accorded.

From the statements issued by the Labour Ministry, the assent will not be given, as labor laws cannot be suspended by an ordinance like this. Until the President's assent is granted, the ordinance cannot come into force. Therefore, as of now, no labor law is suspended in U.P.

I hope this is clear. If you resign, your employer is liable to pay you gratuity within 30 days under the provisions of the Payment of Gratuity Act, 1972.

If any further clarification is needed, you can contact me at [Phone Number Removed For Privacy-Reasons] or via email at [Email Removed For Privacy Reasons].

Thanks,

S. SENSHARMA,

Industrial Law & HR Consultant, Meerut

Dear Nitin, as rightly observed by Mr. Sensharma, the action of suspending the labor laws passed by the Parliament by the State Governments of U.P and others by means of promulgation of ordinances under Article 213 of the Constitution requires the assent of the President of India. I am of the humble opinion that the reverse migration of the inter-state migrant workmen due to the Covid-19 outbreak cannot be a "circumstance" which renders it for the Governor to take such an immediate action of suspending all major labor laws for a period of 3 years as contemplated under Article 213(1) but only an attempt to set the clock back to 100 years and not even a staunch protagonist of labor law reforms would appreciate such a move of anarchy in industrial employment.

Payment of Gratuity to a Resigning Employee

Coming to the issue pertaining to payment of gratuity to a resigning employee as of now, the repeals and saving clause under section 7 of the U.P Ordinance, 2020 protects the previous operation of the various labor laws. Therefore, you are entitled to gratuity on your resignation now.

Thank you for your clarification on the ordinance. I had the same question in my mind: how can any State Government bring such an ordinance and suspend the laws enacted by the Central Government? I was aware that there is no assent yet to it by the President. Still, without applying my mind as to this having no effect as of the date, I stated that by this ordinance, the labor laws, though suspended for three years, the payment of gratuity, which is the award for long service, is protected, but the date of payment is deferred to three years later.

Thank you again for your post, which helped me correct myself. However, I still advise the queriest to hold on to his plan for a job change in the current situation.

Repeal and Savings: Understanding the Impact on Labour Laws

Umakanthan Sir, thanks for drawing attention to Section 7 of the Ordinance under the heading of "Repeal and Savings," which protects the previous operations of various Labour Laws. It is crystal clear that the payment of Gratuity cannot be touched upon. After reading this section, one question came to my mind: if the previous operations of Labour Laws are not affected by this section, then what is suspended?

What I feel is that instead of suspending the Labour Laws, the new list of rules is framed by this Ordinance under various Labour Laws as enumerated in Section 3 of the Ordinance. Is my understanding correct, or am I making a conceptual mistake?

Dear Akhil,

Preamble of the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020

The preamble of the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020, states that it is an ordinance to exempt factories and other manufacturing establishments from the application of certain labor laws for a period of three years. Therefore, this ordinance is not applicable to other types of industrial establishments.

Provisions and Compliance Under the Ordinance

Section 3 of the ordinance exhaustively enumerates the provisions of certain labor laws still to be complied with while bringing all other laws into the fold of total exemption for a period of three years. "The previous operations of various labor laws" mentioned under section 7, in my opinion, refers to the accrued benefits materializing during the period of exemption. Therefore, what stands exempted is the current compliance of the provisions of the Act and Rules pertaining to the maintenance of registers and records and new enrollment into any Fund and the like only.

Firstly, if the organization where the questioner works is not a factory, this ordinance would not be applicable at all. Second, even if it is an exempted establishment, the benefit of gratuity in case of the termination of his employment is an accrued benefit and as such its payment now is not affected by virtue of the saving clause of section 7.

Dear colleagues, as we are discussing the UP government's ordinance on suspending a few labor laws, a plea has been filed in the Supreme Court challenging these ordinances. Please read more from the attachments.

Beyond any doubt, you are entitled to receive payment of gratuity as clearly stated by Umakanthan Sir in his post #7 and also by Sensharma in his post #6. The ordinance as of the current date is not effective since it has not received assent from the President of India. However, please remember my advice to you regarding your plan to make a change during the current situation.

All the very best.

Indeed, an explanatory reply from Mr. Sensharma and Amanthan. Please accept my sincere gratitude. Sir, I would still appreciate your view on the "real meaning of this suspension in the context of gratuity," assuming that this ordinance shall be accorded by the honorable President of India in the coming days.

Does it mean:

1) Gratuity will not be accrued and paid for these three years (suspension needed). However, gratuity accrued till the date of enforcement of this ordinance shall be paid even if someone resigns during these three years.

Or

2) Gratuity will not be paid if someone resigns during this period to give an advantage of additional liquidity to the employer, and gratuity accrued till the date shall be paid post-datedly after three years.

Regards,
Nitin Jain

Suspension of Labor Laws in Uttar Pradesh

The suspension of labor laws for three years in UP by means of an ordinance by the UP Government, although approved by the Governor of the state, has to be assented to by the President. Until then, the ordinance has no effect. Furthermore, the ordinance envisages a temporary period of three years only.

Additionally, the ordinance does not have retrospective effect, so as to be detrimental to your gratuity for the past 11 years.

In view of the uncertainty across all spheres of activities due to the pandemic situation, it is advisable that you stick to your present job and be assured that your gratuity for the past 11 years of service is protected.

If you have any personal compulsion to leave the job, you should resign and collect your gratuity.

Regards, Panchsen

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