Clarification on Gratuity

[Minal Shah]

Dear All,

I am seeking views about gratuity payable to employees being transferred from India to other country.

As per the gratuity rule in India, employees completing 5 or more than 5 years are eligible for gratuity payment, I would like to know whether a company is supposed to pay gratuity to the employee being transferred within a group company who has a separate legal entity from India to other country, even though he/she has not completed 5 years,

Request you to share your views along with proper supporting like extract of laws/ section/ sub-section/ etc.

Thanks & appreciate your help in advance.

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Thanks & Regards
Minal

[Nihal]

Dear Minal, as per the gratuity act it is mandatory to pay an employee on completion of 5 years or more at time of retirement or resignation.

Having said that it does not in any way restrict the company for paying gratuity to any employee not having completed the 5 years.

In your case I suggest that the company should pay as they are transferring him to another entity which will follow the law and also there is no provision of continuity benefit as per the act.

Hope this helps.

Regards,

Nihal 

Sent from my iPhone

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[Rajesh]

Minal

Although it is separate company and different legal entity you need to
consider continuous service. It is still a group company. I assume
that the company needs his service

Just check this case

Bommidala Brothers Ltd. vs Authority, Payment Of Gratuity ... on 10 June, 1988

You would get idea about the applicability of Act and the
justification given by court.

Some owners would form another company every 5 years to avoid
liability. So a broad look is required.

Thanks

Rajesh

--
The mind of a bigot is like the pupil of the eye. The more light you
shine on it, the more it will contract- Oliver Wendell Holmes Jr

[ashish shah]

Dear Minal,

 

If he is tranferred to another country then as per your co's transfer policy the local norms should apply as per law of land.

Generally, such cases are handled by issuing DEPUTATION LETTERS and the terms related to salary, benefits, welfare change as per law of that land.

 

IDEALLY in India we go through LIC for Gratuity covers as it primarily covers LIFE, because in case of any deaths even before completion of 5 years of service, gratuity shall apply and ofcourse after 5 yrs completion it anyway applies.

So, you may also have to look in this perspective for overseas transfers - how does your company cover for life and is gratuity a part of it.

 

Suggest, to review the company's transfer polciy in line with life cover, law of land as per the foriegn country and then decide.

 

In favour of GOOD PRACTICES, grant the employee deemed continuity of services if worked overseas and pay off his gratuity from company if not covered from LIC/any third party.

 

rgds,

ashish shah

9867561182

 

 

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