Eligibility for Gratuity After Service Condition Change
Mr. A joined in 2007 under regular service conditions. He superannuated in 2010 upon reaching 60 years of age. After 2010, his service conditions were revised from regular to contract. After 5 years of service, is he eligible for gratuity?
Regards,
Hemant
From Germany, Hallbergmoos
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Mr. A joined in 2007 under regular service conditions. He superannuated in 2010 upon reaching 60 years of age. After 2010, his service conditions were revised from regular to contract. After 5 years of service, is he eligible for gratuity?
Regards,
Hemant
From Germany, Hallbergmoos
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Since there is continuous service, he will get gratuity on completion of five years regardless of the fact that he was in regular service for a part of five years and under a contract for the remaining part of five years.
Regards,
Madhu.T.K
From India, Kannur
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4526Regards,
Madhu.T.K
From India, Kannur
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Gratuity Eligibility Query
Mr. A joined in 2007 on regular service conditions. He superannuated in 2010 upon reaching 60 years of age. We settled his F&F, PF, and other benefits in 2010, excluding Gratuity, which was part of his CTC. Can he claim Gratuity?
From Germany, Hallbergmoos
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Mr. A joined in 2007 on regular service conditions. He superannuated in 2010 upon reaching 60 years of age. We settled his F&F, PF, and other benefits in 2010, excluding Gratuity, which was part of his CTC. Can he claim Gratuity?
From Germany, Hallbergmoos
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Your case is likely to attract legal complications. First of all, knowing that he will not complete five years on his superannuation, you should not have included gratuity as part of CTC. Secondly, if he was given a full and final settlement, you should have paid him gratuity proportionate to his service without reference to the Payment of Gratuity Act but with reference to his appointment order, which specifically said that he is entitled to gratuity.
Now, since his reappointment has been made for the benefit of the company (there is every reason to believe that his continuing in service is badly required; otherwise, the company would not have employed him after his attaining the age of superannuation), you should consider paying him gratuity when he leaves the organization provided the total service at the time of leaving, including his past service, is five years or more.
If you deny him the gratuity saying that his new appointment starts in 2010 only, the payment can be withheld. But, as stated, if he raises an industrial dispute, there is every chance that he may get it. This is because legally he has been in continuous service though you have changed the status of employment from 'regular' to 'fixed-term contract,' and that change will be treated only as a paper adjustment for the sake of the employer, about which the role of the employee is absolutely nil. Nowadays, the authorities are very keenly watching this aspect, and directions are being issued in favor of employees. However, the legal verdict may take its own time.
Regards,
Madhu.T.K
From India, Kannur
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Now, since his reappointment has been made for the benefit of the company (there is every reason to believe that his continuing in service is badly required; otherwise, the company would not have employed him after his attaining the age of superannuation), you should consider paying him gratuity when he leaves the organization provided the total service at the time of leaving, including his past service, is five years or more.
If you deny him the gratuity saying that his new appointment starts in 2010 only, the payment can be withheld. But, as stated, if he raises an industrial dispute, there is every chance that he may get it. This is because legally he has been in continuous service though you have changed the status of employment from 'regular' to 'fixed-term contract,' and that change will be treated only as a paper adjustment for the sake of the employer, about which the role of the employee is absolutely nil. Nowadays, the authorities are very keenly watching this aspect, and directions are being issued in favor of employees. However, the legal verdict may take its own time.
Regards,
Madhu.T.K
From India, Kannur
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I agree with Madhu. If the employee has reached the age of superannuation, then as per his appointment order, you have to pay him the applicable gratuity without following the condition of continuous 5 years of service. If the employee joins the organization closest to the age of superannuation, it should be predefined in his appointment order and he should be well educated about the final offered CTC.
Regards,
Ulhas
From India, Pune
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Regards,
Ulhas
From India, Pune
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I wish to ask Mr. Madhu, as per Section 4(a) of the Payment of Gratuity Act, 1972, once the employee has superannuated, can he still be in continuous service? Because superannuation will amount to cessation of service, and the post-retirement contract will not entitle him to gratuity.
Thank you.
From India, Pune
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Thank you.
From India, Pune
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Superannuation and Continuous Service
The age of superannuation is not mentioned anywhere in the Act. It is purely governed by the company's policy. Therefore, any period over the age of superannuation is counted as continuous service only unless he is given a settlement of terminal benefits of gratuity at the time of retirement. If you do not wish for a person to continue, stop the service and do not employ him under any status. If you do not stop it, it will be construed that his service is continued for the benefit of the organization, and if so, he will be deemed to be in continuous employment.
Regards,
Madhu.T.K
From India, Kannur
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The age of superannuation is not mentioned anywhere in the Act. It is purely governed by the company's policy. Therefore, any period over the age of superannuation is counted as continuous service only unless he is given a settlement of terminal benefits of gratuity at the time of retirement. If you do not wish for a person to continue, stop the service and do not employ him under any status. If you do not stop it, it will be construed that his service is continued for the benefit of the organization, and if so, he will be deemed to be in continuous employment.
Regards,
Madhu.T.K
From India, Kannur
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Madhu,
1) Can you please explain this part of your comment? "You should consider paying him gratuity when he leaves the organization provided the total service at the time of leaving, including his past service, is five years or more."
2) Since the person is still in employment, we can pay him at the time of resignation or death.
Regards,
Hemant
From Germany, Hallbergmoos
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1) Can you please explain this part of your comment? "You should consider paying him gratuity when he leaves the organization provided the total service at the time of leaving, including his past service, is five years or more."
2) Since the person is still in employment, we can pay him at the time of resignation or death.
Regards,
Hemant
From Germany, Hallbergmoos
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Although you have asked these questions to Mr. Madhu and if you permit me to comment, the summary of the same is as follows:
"Mr. Madhu has very clearly explained each and every point in his notes mentioned above. According to him, you may pay gratuity to the concerned individual or may choose not to pay, as the case may be. However, issues only arise if an employee raises an industrial dispute referring to the appointment letter received at the time of appointment. Considering the continuation of services, the authority may decide in his favor."
Regards
From India, Gurgaon
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"Mr. Madhu has very clearly explained each and every point in his notes mentioned above. According to him, you may pay gratuity to the concerned individual or may choose not to pay, as the case may be. However, issues only arise if an employee raises an industrial dispute referring to the appointment letter received at the time of appointment. Considering the continuation of services, the authority may decide in his favor."
Regards
From India, Gurgaon
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