Question On Gratuity

As per the Indian Gratuity rules, a person needs to complete 5 years with a company. Suppose a person joins a propreitary company which does not provide for gratuity.. After 4 years the company becomes a Pvt Ltd and starts gratuity.. Now if the employee leaves after 3 years.. the total service is 7 years but the period under the Pvt Ltd is only 3 years.. Will the employee be eligible for gratuity?

The Payment of Gratuity Act (like any other labour Act) has nothing to do with how the ownership of the establishment is formed. Therefore, there is no difference in the treatment when the establishment is set up as Proprietorship or Company form (private limited or Public limited)
When the proprietary concern is converted in to a company form a new entity is formed. This act is equal to transfer of undertaking and the provisions of the Industrial Disputes Act would apply on such conversion. It should be presumed that service conditions of the employees have remained the same and as such all employees who were on roll before formation of the company should be treated as joined on actual dates and entitled to gratuity.
Regards,
Madhu.T.K

No problem if the establishment was not covered by EPF when it was constituted as a proprietory concern. EPF contribution has nothing to do with Payment of Gratuity and for that there is no deduction from salary also.
Constitution of the company as partnership or private limited or public limited company is only a matter of the management and it will not affect the services of the employees unless otherwise agreed upon. On conversion, the assets and liabilities of the one man ownership company is taken over by the newly constituted entity, ie, the private limited company. By such act, the company is taking over the employees also and by that taking over, any amount payable to the employees is also being taken over.
Regards,
Madhu.T.K

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thank u sir

Hi...Pf will be calculated on the basic salary i.e 12% of the basic salary.
Gratuity formula -> last drawn basic salary*15/26*no.of years of service

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Thanks & Regards
Devendra Kumar Dubey

Dear Madhu,
I agree with you. But some companies, if EPF is not covered during proprietorship, issue a fresh letter of appointment after conversion of the firm to pvt. ltd.
In such cases the employees lose their right to gratuity for the period of service under proprietorship firm. It happened to some of my collegues.
Regards,

Hi all
Actually i was working in a software company for 3 months and i was in training , during which i got admission in a good college and was forced to join the college very soon , But according company rules i should serve for atleast 2 months after keeping paper , so i just sent a mail of my medical certificate saying i am not well and will not b able to come to work for next 6 months. And then quit t job without informing anyone.
Now my ques is the same company is coming for campus placement in my college , am i eligible to sit in the companys recruitment , if not is there any other way to get permission to work in the same company again bez when i was working i wasnt in any project it was just training ????

Five Years is generally necessary according to the Gratuity Act. However if Gratuity payments are included in your CTC then the Management is bound to honor for less than 5 years .
ss rao

Dear
Plz go through section 4 of P G Act, 1972 for both of your queries regarding eligibility, maximum payment limit & calculation of gratuity amount.
With Regards,
R.N.Khola