Employee Gratuity

make the query more clear. Explain "Shifting" - did he resign from the previous company and joined afresh in the new company OR was it an inter company transfer are A & B are group companies. What were the conditions of the transfer (if it was transfer). These are essential for proper response.

vasudevan

Thanks for your response. ABC & XYZ is a group of company having ONE director only. This both company is working in the same building. Manufacturing & working of both company is same. Mr X had resigned from ABC company after 6 years and a fresh join in XYZ company. Mr. X again had resigned from XYZ company.after 3 years.

Dear Jayesh,

Since the company has changed, the employee would be eligible for gratuity for 6 years for working in the ABC company on the basis of salary last drawn in the ABC company.

Further, since his service in the XYZ does not fulfil the condition of 5 years of qualifying service, he is not eligible for any gratuity in the XYZ.

It is immaterial that both the companies are working in the same building or under the same director. As per law these are two separate bodies/entities. However, if the employee was shifted to XYZ company with spcific mention of transfer from one company to other company for spcific purpose, the case can go in favour of the employee to get benefit of 3 years of additional service in XYZ.

In fact it is normal practice of some companies to avoid terminal benefits or to save expenditure on establishment, they usually try to shift employees from one company to another without assigning any reason.

So, you will have to check the background of shifting of the employee.

Merely having same Director and situation at same place is not sufficient to deny the separate status and entity of different companies. In the present case, both companies are separate legal entities. Thus the employment in each establishment is distinct from other. Since payment of Gratuity act is applicable only after continuous employment of an employee under an employer, thus he is entitled for gratuity from his first employer for the period of 6 year and other employer is not liable for payment of any gratuity to you. Nor same can be claimed for total period of nine years.