• Gratuity in case of change of contract

Team, I have completed more than 5 years in a company as a salaries employee.

Now, my contract has been changed to a consultant so I will be paid as per the invoices I raise so there is no fixed monthly commitment of salary.

I have not resigned but there is a change in contract so in this case am I eligible to apply for gratuity?
Asked 5 months ago in Labour

10 answers received in 1 day.

Lawyers are available now to answer your questions.

10 Answers

Resign from company collect your gratuity and then ask company to give you appointment letter as consultant 

 

2)otherwise company may refuse to pay you gratuity 

Ajay Sethi
Advocate, Mumbai
97244 Answers
7854 Consultations

Gratuity is payable on account of income drawn by the employee provided minimum 240 days of work for 5 years continuous service .

Therefore, your change of contract for service is not going to adversely affect claim right for Gratuity. 

Devajyoti Barman
Advocate, Kolkata
23282 Answers
518 Consultations

Ask the company to pay you gratuity as you have worked for company for over 5 years 

Ajay Sethi
Advocate, Mumbai
97244 Answers
7854 Consultations

As long as you are a salaried employee even if it a contractual in nature, if you have completed 5 years of service then you are eligible for gratuity. 

However subsequent change if the contract as a consultant alone, then yo may not be considered as an employee, hence the gratuity may not be applicable for the consultant.

 

T Kalaiselvan
Advocate, Vellore
87446 Answers
2348 Consultations

A sabbatical is an extended period of time away from work. During this time, employees are still employed and may still be paid. 

 Whether or not a sabbatical leave is paid depends on the employer's policies. In most cases, sabbatical leaves are unpaid.

Sabbatical leave allows employees to take an extended break from work to pursue personal interests, education, or career development, while still retaining their position and benefits.

Hence you can claim gratuity for the entire tenure which will include the sabbatical period of service too. 

You may wait for the employer to decide about the gratuity payment, if he is refusing to pay for some unjustified reasons, you can take it up legally

T Kalaiselvan
Advocate, Vellore
87446 Answers
2348 Consultations

ask them to pay your gratuity now 

 

tomorrow if there is change in management then they may refuse to honour the commitment 

Ajay Sethi
Advocate, Mumbai
97244 Answers
7854 Consultations

Dear Client,

Under the Payment of Gratuity Act, 1972, an employee is entitled to gratuity after completing five years of continuous service with an organization. As per the Payment of Gratuity Act, 1972, continuous service includes periods where the employee is on approved leave. The Act considers such periods as part of continuous service. Based on this, your total period of continuous service can be considered from 2011 to June 2024, despite the sabbatical. The change in your status from a salaried employee to a consultant does not affect your entitlement to gratuity for the period you were a salaried employee. Gratuity is calculated based on your service as an employee, not as a consultant. You need to formally request your gratuity from your employer. This can be done by submitting an application in writing to the company. You can apply for gratuity immediately upon the change of your contract, or you can choose to apply later when you decide to part ways with the company. There is no restriction on the timing of your application as long as it is within a reasonable period after leaving employment. Consider consulting with a labour law attorney if your employer is unresponsive or disputes your claim. Should you require any further clarification, please do not hesitate to contact us.

Anik Miu
Advocate, Bangalore
10289 Answers
121 Consultations

You have to ensure that you are not barred by limitation to claim your dues.

You can better decide about it sooner than to lose the claim by delaying it inordinately.

T Kalaiselvan
Advocate, Vellore
87446 Answers
2348 Consultations

1. You are entitled to gratuity since you have worked /served your employer for a continuous period of 5 years and above.

2. Since you are now working as Consultant it's better to claim gratuity for the period you worked as a salaried employee.

Shashidhar S. Sastry
Advocate, Bangalore
5426 Answers
330 Consultations

- As per law, 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, you have completed 5 years there , hence you are entitled to get gratuity, and company cannot refuse to continue the same even your position is going to be changed. 

Mohammed Shahzad
Advocate, Delhi
14647 Answers
224 Consultations

Ask a Lawyer

Get legal answers from lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer