Am I Eligible for Gratuity After Switching from Contract to Employee Status Before 5 Years?

I have one query on GRATUITY. In the current company (Bangalore, Karnataka) where I am working, I will complete 5 years on 1st Jan 2024, but I would like to exit by 10th Nov 2023. On searching the internet, I am getting conflicting views. Can someone shed some correct light on this?

Eligibility for Gratuity Based on Contract and Employment

1. In my current company, I was on CONTRACT hire from 5th Nov 2018 to 31st Dec 2019. I was given a contract for HIRE from 5th Nov 2018 to 5th Feb 2019, but they gave me a new contract as an EMPLOYEE from 1st Jan 2019, and I accepted the same. Then, in the same company, I became an EMPLOYEE from 1st Jan 2019, and my last date is probably going to be 10 Nov 2023. Will I be eligible for GRATUITY (considering I am completing my 5 years if CONTRACT hire is also included)?

240-Day Ruling and Its Applicability

2. I heard about the 240-day ruling by the Honorable Madras and Honorable Kerala High Court for the fifth year. Will this make me eligible for gratuity as I have already crossed 240 plus days as of now? Does this ruling of a different state High Court apply to the Karnataka state?

Can someone tell me if #1 and/or #2 will be applicable in my case for Gratuity?

Thanks,
Sujit

In my opinion, you are entitled to gratuity considering your contractual period as well as being a payroll employee of the organization. Continuous service under the Payment of Gratuity Act does not specify that an employee will be eligible for a bonus if they are permanent employees. The nature of employment has nothing to do with the payment of gratuity.

Understanding Employment Types and Gratuity

Lord Krishna had 108 names, but the person was one, that is, Krishna. Similarly, one employee may be engaged as contractual, casual, temporary, and permanent, but the person is one.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in

As per the Payment of Gratuity Act, those who have completed 5 years of service in the same company will be eligible for gratuity. However, in your case, you were on a contract basis for one year with specific terms and conditions. Therefore, that period will not be considered in the calculation of your length of service, making you ineligible for gratuity.

Regards, Sanjay Kumar Pandey
GM (HR)
Jai Balaji Group

Combining contractual and regular roles, you have completed 5 years of service. You have worked for the same employer from 5th Nov 2018 to 10th Nov 2023, and therefore, the employer should consider the contract period as part of your service and should pay you gratuity. Despite the difference in employment categories, you have served on a full-time basis without any breaks in between. It is important to have documentary evidence for both your contract and regular employment roles. You can apply for gratuity, and if there is no response from the employer, you may appeal to the Assistant Commissioner of Labour in your office's jurisdiction.

Dear Sujit,

You are entitled to gratuity. This is a case similar to the judgment of the Madras High Court in the matter of Superintending Engineer, Mettur Thermal Power Station, Mettur vs. Appellate Authority, Joint Commissioner of Labour, Coimbatore & Anr, 2012 LLR 1160. In this judgment, the contract employee was transferred from contractor rolls to the rolls of the power station, and liability was shifted to the Principal Employer. However, you continued on the rolls of the same employer.

The Payment of Gratuity Act states the continuity of service, and you have continued the service for 5 years with the same employer regardless of your employment status.

If the employer denies, and you approach the Controlling Authority, the case may rule in your favor. You may also receive interest for the delay.

Regards,

Dr. Kamlesh Agrawal