Gratuity: New rules for gratuity issued for contract employees

Now the question arises whether the employees who work on contract are also paid gratuity. Is their gratuity different from other employees?

When wanted to know about this from the expert, many interesting information came to the fore. It was learned that provision has been made in the Gratuity Act for those working on contract as well.

Along with this, the decision of the High Court has also come in his favor. Not only this, the government is preparing to enact a law to give them gratuity in just one year.

Those working on contract are also required to be given gratuity after the stipulated time limit. Its claim process is also the same as that of normal employees.

what is the current law

The Gratuity Act 1972 states that if an employee has worked continuously for 5 years or more with one employer or company, then he is entitled to gratuity.

Those working on contract have also been given this right. However, it states that instead of the company for which he works, he will pay gratuity for the work with which the employee has a contract.

That is, if a placement agency provides employees on contract to the company on its behalf, then only that agency will pay gratuity after a fixed period.

what is the order of the high court

The Madras High Court ruled in a case in the year 2012 that if the contractor fails to pay gratuity to a contract worker under Section 21(4) of the Gratuity Act 1972

So the principal employer ie the company for which that employee works directly, will pay it under section 4(6D) of the Gratuity Act 1972.

However, the employer will have the right to recover his amount from the contractor company.

What is the preparation of the government

For those working on contract or contract, the Modi government is making a law to provide gratuity in just 1 year. According to the information given to the House by the government,

Gratuity will be paid if the employee working on contract remains connected with a company or employer continuously for one year. Such employees will also be given the right to social security like regular employees.