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How can I get gratuity


12-Jun-2023 (In Labour & Service Law)
I worked for company A from Jun 2005 till Dec 2010 (5 years 6 months). I also held shares in the company provided to me as sweat equity. From Jan 2011 till Oct 2013, I worked with company B (2 years 9 months). Company A is an associate company of company B. I was therefore with the same group from Jun 2005 till Oct 2013. The management is saying I am not eligible for gratuity as my status in company A was that of a 'co-promoter' and my tenure is less than 5 years in company B. There is nothing in writing about 'co-promoter' and I was drawing regular salary with both company A and B. Please adv
Answers (1)

Answer #1
88 votes
Gratuity is a statutory benefit paid to the employees who have rendered continuous service for at least five years. It is a lump sum amount paid to an employee based on the duration of his total service. The benefit gratuity is payable to an employee on cessation of employment (either by resignation, death, retirement or termination, etc) by taking the last drawn salary as the basis for the calculation. Gratuity is an important form of social security and is in the form of a gratitude provided by the employer to the employees in monetary terms for the services rendered by them to the organization. It is a defined benefit plan and is one of the many retirement benefits offered by the employer to the employee upon leaving his job. Gratuity payment liability of the employer tends to increase with an increase in the salary and tenure of employment.
Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years. An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service and includes service which may be interrupted on account of sickness, accident, leave, absence from duty without leave, lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
If you have received a different employment letter from the company upon joining company B then you are legally not bound to receive gratuity as you have not completed 5 years of service in that company. The term of employment in the company B will be counted from your date of joining in your appointment letter in the company.
An associate company would not necessarily mean that it will be counted as the same company. An associate company (or associate) in accounting and business valuation is a company in which another company owns a significant portion of voting shares, usually 20–50%. In this case, an owner does not consolidate the associate's financial statements.
 

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