Why Is My Sister's Gratuity Denied After Hospital Became Pvt Ltd? Seeking Insights

Hi everyone, my sister has been working as a nurse in a hospital for the past six years. She's planning to resign and is requesting her gratuity and PF settlement. However, the hospital's HR department has informed her that since the hospital became a Pvt Ltd company less than a year ago, they cannot provide the gratuity amount. They provided a UAN number, and upon checking, it shows that PF deductions started from July 1, 2022 (her joining date was August 17, 2018, as per her appointment letter).

Gratuity Denial Inquiry

I'm curious why her gratuity amount is being denied. Is it because the hospital became a Pvt Ltd less than a year ago, or is it related to the PF deductions starting from July 1, 2022? I'd appreciate your insights on this matter.

Hi, gratuity is applicable to every form of business, including proprietorship, partnership, or a limited company. Private hospitals are also covered under the Payment of Gratuity Act, 1972. The Gratuity Act applies to all establishments, including hospitals employing 10 or more workmen. I think the hospital is trying to evade the gratuity payment.

Gratuity Eligibility for Hospital Employees

The Gratuity Act applies to all establishments, including hospitals. Hence, your sister is eligible and has the right to claim gratuity. If denied by the management, please write a letter to the hospital management seeking gratuity by stating the date of joining, leaving, and duration of service, with a copy to Dy.C.L. If you have not received any reply from the hospital, then file a petition before DCL, and you can claim.

Hi, As per the Gratuity Act, the respective Assistant Labour Commissioner will be the Controlling Authority, and the Deputy Labour Commissioner will be the Appellate Authority.

You mentioned that your sister is planning to resign. So, once her resignation is confirmed on the day of relieving, advise your sister to submit Form 'I' (application form for Gratuity). According to the Gratuity Act, the employer is liable to settle the gratuity within 30 days from the date of exit. If the employer is unwilling to pay the gratuity amount, you may file a petition before the Assistant Commissioner of Labour of the respective jurisdiction.

Hi, thank you for your reply. I need some clarification:

1) If I request gratuity when submitting my resignation letter, will they terminate my sister?

2) How do I send a copy to the Deputy Chief Labour Commissioner through email or post? What would be the address if we send it by post?

Sorry for asking these questions. If you don't mind, I will give you my contact details: [Phone Number Removed For Privacy-Reasons].

Hi,

Resignation and Notice Period

1. I don't think so. As long as the proper notice period is served, the employer has no right to terminate an employee. After submitting the resignation, advise your sister to serve the proper notice period. After receiving the relieving letter, an application for gratuity can be submitted. Wait for 30 days; in case of no response, proceed with approaching the ACL.

Filing a Complaint with the Assistant Labour Commissioner

2. Please find out the location of the Assistant Labour Commissioner's Office for Karur. The ACL office will guide you on the complaint filing process.

Hi Karthick,

Gratuity:

Gratuity is a statutory benefit provided by employers to employees as a gesture of gratitude for the services rendered. The eligibility for gratuity typically depends on the duration of continuous service. In many countries, employees become eligible for gratuity after completing a certain number of years of service (often five years). The change in the hospital's legal structure (from, for example, a partnership to a private limited company) may not necessarily affect an employee's entitlement to gratuity. However, the eligibility criteria may depend on local labor laws, and it's crucial to consult the relevant employment regulations in your jurisdiction.

Provident Fund (PF):

PF is a mandatory savings scheme in which both the employer and employee contribute a certain percentage of the employee's salary. The UAN (Universal Account Number) is a unique number assigned to each member of the Employees' Provident Fund Organization (EPFO) to track their PF contributions. The starting date of PF deductions may not necessarily impact gratuity entitlement. The PF deductions usually start from the date of joining, and any discrepancy in the start date should be clarified with the HR department or EPFO.

Your sister may want to take the following steps:

- Review her employment contract and any relevant company policies to understand the terms and conditions related to gratuity.
- Check the labor laws to understand the statutory requirements for gratuity eligibility.
- Seek clarification from the HR department regarding the denial of gratuity and ask for specific reasons.
- Consult with a legal professional or a labor law expert to get advice tailored to her specific situation and local regulations.

It's essential to gather all relevant documents, such as her appointment letter, salary slips, and PF statements, to provide a clear picture of her employment history when seeking legal advice or assistance.

Thanks

Change in Organization Form and Employment Status

The matter to be decided is whether changing the form of the organization results in new employment. The employer will try to show that the previous employer (partnership/proprietorship) is different from the current company. The Labour Commissioner will need to take a call on the matter. I am not sure, but I think the courts have decided in favor of employees before.

She worked from 2018, so she didn't finish 5 years in the old organization, or it would be even easier. If she wishes, she can go and meet the Labour Commissioner and get his opinion on how he would view the case.

She can still file the application, but if he disagrees, going to court is an option but not recommended.

Factors Influencing the Labour Commissioner's Decision

How the transition took place, whether she was given a letter or she was given a new appointment letter with no reference to the previous job... These will make a difference to the Labour Commissioner's decision.

The employee is eligible for gratuity. There is nothing to do with Pvt Ltd or any status. The employee needs to meet the controlling authority, i.e., ALC, Labour Office, to file her claim of gratuity. Trust she will get it.