Migration of gratuity liabilities while payroll migrated from Outsourced Pay roll to principal employer payroll
10 months ago
A person is working under payroll of an outsourced payroll in a company. After four years the outsourced company left without settlement of accounts. The person is absorbed under principal employer, now how to protect his Gratuity liabilities
A.Dear Client,
On absorption of a contractor worker by the principal employer, the worker is eligible or entitled to the benefit of continuous service and once he completed continuous service of 05 years that requires for payment of gratuity under the Payment of Gratuity Act, 1972. he is eligible for gratuity from his employer on resignation/retirement from service. In case of denial to disburse gratuity by the employer, reach out to the office of the concerned Labour Commissioner who is the controlling authority under the Payment of Gratuity Act, 1972, for filing a complaint for non-payment of Gratuity against the employer.
On absorption of a contractor worker by the principal employer, the worker is eligible or entitled to the benefit of continuous service and once he completed continuous service of 05 years that requires for payment of gratuity under the Payment of Gratuity Act, 1972. he is eligible for gratuity from his employer on resignation/retirement from service. In case of denial to disburse gratuity by the employer, reach out to the office of the concerned Labour Commissioner who is the controlling authority under the Payment of Gratuity Act, 1972, for filing a complaint for non-payment of Gratuity against the employer.
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A.Dear client,
The Payment of Gratuity Act, 1972 does not differentiate between on roll & off roll employees (except govt approved apprentices).
An "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishments to which this Act applies, 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;.]
Employees on third party payrolls are actually the direct liability of Principal employer. Eg: If this same employee would have worked with the third party for 05 years & left, the actual liability of any gratuity payment would have been on your company (i.e the principal employer) The third-party/contractors are just intermediaries & they bill every such liabilities to their clients & the client is bound to pay all statutory payments arising out of employing such off-roll employees.
So now if you are taking him on-rolls, you will have to take into consideration his earlier years of service (till the time he was off-roll). Continuity of employment is what matters in Gratuity. And the moment he completes 05 years (off-roll plus on0roll), he will become eligible for gratuity payout.
The Payment of Gratuity Act, 1972 does not differentiate between on roll & off roll employees (except govt approved apprentices).
An "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishments to which this Act applies, 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;.]
Employees on third party payrolls are actually the direct liability of Principal employer. Eg: If this same employee would have worked with the third party for 05 years & left, the actual liability of any gratuity payment would have been on your company (i.e the principal employer) The third-party/contractors are just intermediaries & they bill every such liabilities to their clients & the client is bound to pay all statutory payments arising out of employing such off-roll employees.
So now if you are taking him on-rolls, you will have to take into consideration his earlier years of service (till the time he was off-roll). Continuity of employment is what matters in Gratuity. And the moment he completes 05 years (off-roll plus on0roll), he will become eligible for gratuity payout.
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