We are a group of companies under which we have 5 different companies. The directors are common to all 5 companies, and the registered office address is also the same. If we transfer an employee from Company A, where he has worked for 3.5 years, to another company B, where he has worked for 4.4 years, will he be eligible for Gratuity? We have common directors.
Please advise.
From India, Delhi
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1Please advise.
From India, Delhi
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Yes, his date of joining in the first company will be treated as date of joining for all purposes including continuous service.
From India, Kannur
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From India, Kannur
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This is a question of both law and facts and would depend on the working arrangement between the two establishments. According to the Companies Act of 2013, a company is distinct from its shareholders. Therefore, each company is separate and distinct; this is the legal position. Unless the facts demonstrate an integrality in the functioning, the claim is unlikely to be upheld. The outcome will depend on how the case is presented. The PGA 1972 does not include a provision for the clubbing of units.
From India, Mumbai
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From India, Mumbai
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I agree with Madhu T.K. At the time of transferring the employee from organization A to B, it is essential to mention it as continuous service. If it is not mentioned as continuous service and if it is treated differently for not paying gratuity by finding loopholes in the law, then it is exploitation of the concerned employee and a wrong practice followed by the organization.
S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions +91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions +91 98310 81531
From India, New Delhi
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The transfer was done after doing full and final settlement in the first company . Is gratuity still applicable
From India, Delhi
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From India, Delhi
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This is a situation that requires the intervention of law enforcement officers. The objective behind such actions (it is not a transfer when there is a full and final settlement at company A) should be carefully examined because prima facie evidence suggests that it was a deliberate act to avoid payment of gratuity.
When all five establishments belong to the same set of employers and there is financial integrality, transferring employees from one establishment to another as part of business exigencies is common. In such cases, there would not typically be a settlement, but only a transfer of responsibilities. If an employee is transferred from one unit, given a final settlement, and issued a fresh appointment letter to join another establishment under the same management, it could be seen as an attempt to deny gratuity.
From India, Kannur
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When all five establishments belong to the same set of employers and there is financial integrality, transferring employees from one establishment to another as part of business exigencies is common. In such cases, there would not typically be a settlement, but only a transfer of responsibilities. If an employee is transferred from one unit, given a final settlement, and issued a fresh appointment letter to join another establishment under the same management, it could be seen as an attempt to deny gratuity.
From India, Kannur
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When Mr. Madhu T K is mentioned, I would like to add that the strategy of the organization, along with the HR team, is to find out loopholes in acts to deprive the employee by not paying Gratuity. The basic purpose of the PG Act is to pay gratuity if the employee continues in their job with one employer.
F & F with Organization A and then reappointment to Organization B will appear in the eyes of the law as exploitation. My personal feeling is that if the matter is placed before the controlling authority of the PG Act, it will be in favor of the employee. I have no knowledge about any case law regarding this matter.
I will only request the organization and HR team members to think positively and not exploit any employee.
S K Bandyopadhyay (Howrah, WB) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity www.usdhrs.in
From India, New Delhi
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F & F with Organization A and then reappointment to Organization B will appear in the eyes of the law as exploitation. My personal feeling is that if the matter is placed before the controlling authority of the PG Act, it will be in favor of the employee. I have no knowledge about any case law regarding this matter.
I will only request the organization and HR team members to think positively and not exploit any employee.
S K Bandyopadhyay (Howrah, WB) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity www.usdhrs.in
From India, New Delhi
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I wish to add a little here. The query states that it is a transfer from A to B. If it is a transfer, then the employee is eligible as there is no break in service. If, as one colleague pointed out, it is movement from A to B after full and final settlement, then the employee is not eligible for continuity of service. However, the word "transfer" does not arise here.
In the eyes of the law and on complaint, the authorities may see it from a different angle, including mens rea. If the purpose is to avoid gratuity, actions will follow.
From India, Hyderabad
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In the eyes of the law and on complaint, the authorities may see it from a different angle, including mens rea. If the purpose is to avoid gratuity, actions will follow.
From India, Hyderabad
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