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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?
From India, Bengaluru

The Act has not restricted the payment of gratuity to workers only. It is payable even to the CEO/ MD also. Therefore, it is the total number of employees and not the designation which will decide the applicability of the Payment of Gratuity Act. As such, if your number of employees (including the Directors and Senior Executives getting salary) is 10 then the Act will be applicable to your establishment.
From India, Kannur


(e) "employee" means any person (other than an apprentice) employed on
wages, [3] [***] 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, [4] [and whether or not such person is
employed in a managerial or administrative capacity, but does not include
any such person 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 the above definition for employee as per Gratuity Act.

The interpretation is wrong and Gratuity is applicable.

From India, Madras

The definition posted by Mr Laksminarayan is as existed prior to 2009 amendment in sec 2(e).
From India, Thiruvananthapuram
applicable to all the employees working in the company either staff,worker, executive. Wrong information provided by him.

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