How Is Gratuity Calculated for Contractual Employees with Multiple Payroll Consultancies?

Dear Sir/Madam, I would like to inquire about how gratuity will be calculated for a contractual employee. I have served a total of 8 years and 9 months in the same IT company under two different payroll consultancies. Initially, I worked for 3 years and 4 months with the first consultancy. After this period, my payroll consultancy was changed without any gap, and I continued to work for another 5 years and 4 months. Due to the impact of Covid-19, my contract was not renewed, leading to a loss of job.

I seek your guidance on whether my gratuity will be based on my total years of service or solely from my current consultancy's date of joining. Your assistance on this matter would be greatly appreciated.

Please reach out to me at [Email Removed For Privacy Reasons].

Thank you.

Filing a Claim for Gratuity

You send notices of claim for the entire stretch of 9 years to the principal employer and the two contractors simultaneously. Certainly, all would reject your claim, disowning their liability on some ground or other. Then file a claim against all three before the Controlling Authority for the area where the principal employer's establishment is situated.

You have a strong case for receiving gratuity for 8 years and 9 months (rounded to 9 years) for the continuous service rendered under the same principal employer, irrespective of the number of payroll consultants under whom you were employed during the corresponding period. The Madras High Court relied on a decision rendered earlier in the case of Madras Fertilizers Limited vs. Controlling Authority under Payment of Gratuity Act and Others and held that 'gratuity' payable under the Payment of Gratuity Act, 1972, were wages for the purposes of the CLRA. Consequently, by virtue of section 21 (4) of the CLRA, the onus of payment of gratuity would lie on the principal employer in the event of a contractor’s failure to pay gratuity.

What you need to do is to make an application (claim) to the two consultancy contractors under whom you were employed and also the principal employer, seeking to settle your gratuity for the entire period of 8 years and 9 months (rounded off to 9 years). In the event of their failure to settle the claim within 30 days (either no reply or decline of claim as the case may be), you can move the controlling authority under gratuity of the appropriate government applicable to your establishment by way of a complaint in the prescribed form. This will eventually culminate in your claim for gratuity being successfully settled after two or three sittings of all necessary parties.

All the best

Regards, P.Senthilkumar

[Email Removed For Privacy Reasons] [Phone Number Removed For Privacy-Reasons]