Is an Employee Eligible for Gratuity When Working Across Multiple Establishments?

Respected Seniors,

I am searching for the judgment in The Payment of Gratuity Act.

The employee has worked in 3-4 different establishments where all the owners are different, but the place of work is the same, and the job of the employee is the same.

All the establishments are working as a contractor for the principal employer. These establishments are closed at intervals of 3 to 4 years.

Let's say:
1. A Firm started in Jan 2012 and closed in Dec 2015
2. B Firm started in Jan 2016 and closed in Dec 2018
3. C Firm started in Feb 2019 and closed in Mar 2022
4. D Firm started in Apr 2022 and remains in operation to date.

In such a case, my opinion is that the employee is eligible for gratuity.

Require senior views.

Regards,
Arihant

If you can establish that these employers are one and the same, you can demand gratuity from the last employer where you leave after meeting the eligibility condition of five years' service. It is not easy to win the issue, but you have to establish that there has not been any termination from each of the employer establishments and joining in another, and there has been financial integrality among these employers. Opening one and closing the other is just for the name's sake and not following the law.

Gratuity Payment Responsibility

The payment of gratuity is payable by the paymaster (the employer), not by the principal employer. The principal employer cannot be the employer of workmen and employees engaged under agencies who are working in their establishment.

Eligibility for Gratuity

As per your posting, the employee has worked with different employers but did not state the eligibility period of working. Since the employee didn't complete five years of working with any of the employers, they are not eligible for gratuity.

Proving Contractor Engagement

The only possibility for the employee to prove before the authority is that the contractor engagement is a sham or camouflage, or there is no scope otherwise. The contractor establishments work with any principal employer via work orders, and each work order is regulated with time factors (duration). I don't see any work order being issued for 60 months. Employment ceases at the end of the work order, work, or validity period of the labor license. Therefore, eligibility for gratuity does not exist.

Eligibility for Gratuity Under the Payment of Gratuity Act, 1972

Whether an employee is eligible for gratuity depends on the Payment of Gratuity Act, 1972. Usually, an employee needs to work continuously for at least five years with the same employer to qualify. However, if an employee works in different establishments, the key is whether these places are considered part of the same "establishment" under the Act. If they are, the time worked in all these places might be counted together for gratuity eligibility.

It's essential to note that the details can vary based on factors like the type of job and industry. Laws can also change, so it's a good idea to check the latest rules or consult with a legal expert for the most accurate information. Stay informed to ensure you're aware of any updates to the Payment of Gratuity Act or related regulations.

Dear Experts,

Thank you so much for providing your views. I am giving more clarity to my query.

Let's say the employee's name is Rahul Dixit. Previously, he was working with the establishment named ABC & Co for 3 years. The place of work of ABC & Co is, let's say, 1st Floor, Lajpat Nagar, New Delhi. The establishment is also registered under the Factory Act and has obtained a Factory License.

After 3 years, the said employee was shifted to DEF & Co. This establishment has also obtained a Factory License at the above-mentioned address and is working as a contractor for ABC & Co.

After 4 years, the said employee was transferred to GHI & Co. This establishment has also obtained a Factory License at the above-mentioned address and is working as a contractor for ABC & Co.

After 3 years, the said employee was transferred to JKL & Co. This establishment has also obtained a Factory License at the above-mentioned address and is working as a contractor for ABC & Co.

The designation of the said employee is the same in all establishments. The place of working is also the same for the said employee. All the establishments are engaged in the same business.

ABC & Co has helped the employee to open his bank account and start receiving salary from the said establishment as well as from other establishments. There is hardly a break of 1 or 2 months during the transfer of the employee.

All the establishments have accepted that the employee has worked with them but has not completed 5 years as mentioned in the act. All the establishments have submitted their replies in common by the common authorized person.

There is 1 judgment for the same, but as of now, I can't recall. Kindly help me in the said matter.

Dear Experts,

I would like to further inform you that the address of all establishments is the same.

Thank you.

Sham Contract Arrangement and Gratuity Entitlement

This is a sham contract arrangement. The principal employer remains the same, but the contractor changed, and that too while keeping you working for all these years. The breaks while you were transferred from one principal employer to another are only artificial breaks and are irrelevant for gratuity entitlement. With this information, you can approach the controlling authority (Labour officials) and file a complaint.