Gratuity Dilemma: Do We Need to Pay Gratuity to Former Employees Not Covered by the Act?

Dear All, I need your valuable advice as I am facing some issues related to gratuity in our company. Mr. X joined the company on 03.06.2009 and retired on 31.03.2022. After that, we hired him as a consultant, and his consultant contract has also been terminated. Now, Mr. X is demanding his gratuity for the tenure when he was a direct employee.

Gratuity Payment Concerns
Our company is not covered under the Payment of Gratuity Act. Is it compulsory for a company to provide gratuity, or what are the problems we may face if we don't provide gratuity?

Please advise on the above issue.

Hi, What is the size of your organization? You have not mentioned how many employees are working in your office.

Gratuity Payment Obligation
Organizations with a workforce of 10 employees on a single day in the preceding 12 months are liable to pay gratuity. If the number of employees in the same organization reduces to under 10, it will still have to pay the gratuity as per the regulations of the Act.