Gratuity Act Confusion: Is It True That Executives in Small IT Firms Aren't Covered?

Someone asked me about the applicability of the Gratuity Act to their small product-based IT company, which consists of 10 employees, including software engineers, HR, and accounts team members. They consulted a professional who stated that since all ten employees are executives, the act is not applicable. Do you think this interpretation is correct?

The act has not restricted the payment of gratuity to workers only. It is payable even to the CEO/MD as well. Therefore, the total number of employees, and not the designation, will determine the applicability of the Payment of Gratuity Act. If the number of employees, including Directors and Senior Executives receiving a salary, is 10, then the act will apply to your establishment.

Hi, The term "employee" means any person (other than an apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop to do any skilled, semi-skilled, or unskilled manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such a person is employed in a managerial or administrative capacity. However, this does not include any individual who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

Please refer to the above definition for an employee as per the Gratuity Act. The interpretation is incorrect, and gratuity is applicable.