Gratuity Confusion: How Should Mr. Raja's Retirement Benefits Be Handled Across Contracts?

Dear Sirs, Good Morning to All.

Seek clarifications on applicability of Gratuity for Contract Employee at the time of retirement

We give below the case:

1. Name of the Company: ABC & Co
2. Name of the Contract employee: Mr. Raja
3. Name of the contractors: (1) M/s. SUN (2) M/s. Moon and (3) Star.

ABC & Co is having 3 contractors for the supply of manpower. The Principal Employer is the same.

1. Mr. Raja worked in the SUN Contract for 18 years. He has been transferred to the Moon contract by the Management. The SUN Contract settled his gratuity (as reimbursement of expenses claimed with Management and settled).

2. After 3 years of service, Mr. Raja has been transferred to the Star Contract by the Management.

3. He worked in the Star Contract for 4 years and attained 58 years. Now the Star Contract issued a retirement order.

But Mr. Raja has not been paid gratuity for 7 years (3 years in the Moon contract and 4 years in the Star Contract).

Mr. Raja worked in the same company with 3 different contractors. M/s. SUN contract settled gratuity (reimbursement of expenses). Now Mr. Raja is requesting gratuity. Transfer from one contract to another contract is done by Management only. Now three contractors also supply manpower to the Company.

Please advise on how to settle this issue.

Regards, Ganapathy V

Exploitation of Contractual Employees

This is a classic case of exploitation of contractual employees, who are often considered the weaker section of society. In similar cases earlier, I have shared my views. In this type of case, we should not rigidly consider the legal point. Even in this case, the employer made the decision to transfer the contractual worker from one contractor to another. Actually, the majority of these types of cases happen due to the employer's decisions.

Gratuity Entitlement for Contract Workers

In my opinion, the contract worker should receive gratuity based on the last drawn Basic & DA for a total of 18+7 = 25 years. Since gratuity was settled with the first contractor after 18 years, the contractual worker was still deprived as the Basic & DA were lower at that time. If the contractual worker had voluntarily changed the contractor, then there might not be any issue.

I have an MNC client who has considered the entire service period under different contractors but within one Parent Entity (MNC) for contractual workers, paying gratuity based on the last drawn Basic & DA for the entire service period.

Role of HR Professionals

We, as HR professionals, should not seek out bypass routes for the exploitation of contractual workers. I strongly feel that if such cases are taken to court, the court will likely rule in favor of the contractual employee.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To Strive towards excellence with effort and integrity