• Gratuity gambit

Hi, 
My company had more than 10 employees in 2017 but since 2018 we had less than 10 employees and in the last 15 months 6-7 employees. Am I covered under the gratuity act or not?
Asked 4 years ago in Business Law

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22 Answers

As per the Gratuity act it should be 10 or more than 10 employees for those employees its applicable. but kidly check the Establishment certificate of the company at the time of formation, that how much employees details has been mentioned in it and process of the company.

 

The Payment of Gratuity Act, 1972 (the Gratuity Act) is applicable to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments with ten or more employees. 

Ganesh Kadam
Advocate, Pune
12987 Answers
262 Consultations

No. Your company is not covered under Gratuity act.

Devajyoti Barman
Advocate, Kolkata
23191 Answers
510 Consultations

1. Co. becomes liable for Gratuity for that F.Y. where the employees are 10+

2. IF in succeeding F.Y. Employee strength has to reduce perpetually (with justifications like reduced requirements or production etc.... ) THEN duly inform the authority of the same to be exempted from Gratuity.  For this purposes you would need to retain employee records and Audit Report of Co. specifies no. of employees.

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

Payment of Gratuity is governed by the Gratuity Act, 1972. And as per the act, plantations, ports, railway companies, factories, mines, oilfields and other establishments that have 10 or more employees, are required to make gratuity payment towards their employees' services.

2)once employee strength of any organisation reaches 10 or more, then the employees of that organisation are eligible for gratuity payment even if the strength goes below 10 in subsequent years.

Ajay Sethi
Advocate, Mumbai
96755 Answers
7804 Consultations

Yes, you are.

Swarupananda Neogi
Advocate, Kolkata
2973 Answers
6 Consultations

Yes if the no of employees in date if your joining was more than 10 it will be applicable. If it further reduces still it will be applicable

Prashant Nayak
Advocate, Mumbai
32366 Answers
199 Consultations

Dear Sir,

The said Act is applicable to  every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months. As per your information, you had 10 employees in the year and hence this act was applicable and will continue to be applicable until and unless such measures are taken for removal of applicability on account of substantial changes.But when the number of employees fell down to less than 10 members, you are/were required to inform the concerned authority regarding this. If you have not done earlier, then you may take steps now. 

Ganesh Singh
Advocate, New Delhi
6757 Answers
16 Consultations

All the Assistant Labour Commissioners and Labour Officers in the Labour Department have been appointed Controlling Authority  In Delhi 

Ajay Sethi
Advocate, Mumbai
96755 Answers
7804 Consultations

No sir you are not covered

Anand Shukla
Advocate, New Delhi
666 Answers
14 Consultations

Gratuity act applies on establishment in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.

Dose not applies on your firm from 2019. 

Yogendra Singh Rajawat
Advocate, Jaipur
22984 Answers
31 Consultations

- As per Section 1(2) of the the Payment of Gratuity Act, this Act applies to all factories, mines, oilfields, plantations, ports and railway companies , but in the case of shops or establishments, other than those stated before, it applies to those organisations with 10 or more persons are employed on any day of the preceding 12 months. 

- Further, an employee is eligible to receive gratuity, only if he has completed minimum five years of service with an establishment.

- Further , as per Madras High Court, the gratuity of an employee who completes 4 years and 240 days of service  is eligible for gratuity.

- Further, as per Section 2A(1) , an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave. 

- And further, Section 4(2) of the Payment of Gratuity Act provides that for every completed year of service in excess of six months, the employer shall pay gratuity to an employee for the whole year. That means if an employee works in the establishment for more than 6 months in a year, he shall be eligible to get gratuity , if the employee has had continuous service of 190 / 240 days.

- Since, your company is not completing the octet of 10 employees , hence you are not covered under the Gratuity Act. 

- Assistant Labour Commissioners  officer 

Mohammed Shahzad
Advocate, Delhi
14415 Answers
221 Consultations

Now ypu are not covered under Gratuity Act. 

Gratuity is governed by the office of Provident funds 

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

Once you come within the ambit of the gratuity act you cannot escape the responsibility.

Rahul Mishra
Advocate, Lucknow
14107 Answers
65 Consultations

Astt. Labour commissioner.

Rahul Mishra
Advocate, Lucknow
14107 Answers
65 Consultations

Organisations with a workforce of 10 employees on a single day in the preceding 12 months are liable to pay gratuity. If the number of employees of the same organisation reduces to under 10, it will still have to pay the gratuity, as per regulations of the Act.

Mohammed Mujeeb
Advocate, Hyderabad
19306 Answers
32 Consultations

The Asst. commissioner of Labour concerned is the authority concerned to hear and decide. 

Mohammed Mujeeb
Advocate, Hyderabad
19306 Answers
32 Consultations

Gratuity is government by Payment of Gratuity Act, 1972 and various establishments viz., mines, factories etc., and other establishments that employee 10 or more employees are required to pay Gratuity to their employees.

Once the head count of employees  of any organisation touches 10 or more in any year, the employees are eligible to gratuity if the strength is less than 10 in subsequent years.

  

S Srinivasa Prasad
Advocate, Hyderabad
2876 Answers
9 Consultations

 

Concerned authorized Labor Officer of your Domicile i.e., Assistant Commissioner of Labor or Labor Officers appointed by the Labor Department of Delhi.

 

S Srinivasa Prasad
Advocate, Hyderabad
2876 Answers
9 Consultations

An employee will be covered under the Act if the organisation employees at least 10 persons on a single day in a preceding 12 months. And once an organisation comes under the purview of the Gratuity Act, then it will always remain covered even if the number of employees is falls below 10.

 

T Kalaiselvan
Advocate, Vellore
86956 Answers
2334 Consultations

The gratuity rules are mandated under the Payment of Gratuity Act, 1972. The act was passed by the Parliament on 21st August 1972 and came into force on 16th September the same year.

All central and state government departments, defense, and local governing bodies are covered under this act. Private organisations can come under its purview subject to fulfillment of certain conditions.

T Kalaiselvan
Advocate, Vellore
86956 Answers
2334 Consultations

Yes you are eligible for gratuity.

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

Finance department.

Swarupananda Neogi
Advocate, Kolkata
2973 Answers
6 Consultations

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