Are part-time employees eligible for gratuity in India?
Introduction
Gratuity is an advantage which is owed by the employees of the company under the Payment Act of 1972 for Gratuity. Let us discuss the basic definition of gratuity: It is an amount of money delivered by an employer to an employee for their duties contributed to the company. But, it applies to the employee only in this case to complete five or more years with the same company. Gratuity is also implemented on the people working in a part-time job for five or more 5 years. All type of employees casual, ad hoc, or part-time employees are entitled to gratuity Yes, part-time employees are eligible for gratuity in India. Sometimes the condition where the employees completed their 5 years but instead of that the employee will not be eligible for gratuity payment because he /she has been terminated due to violent conduct wherein, he/she tries to physically harm someone during the employment.
Gratuity Eligibility For Organization and Employee
Following is the condition when a company will be eligible to give a gratuity to its employee.
When the company has more than 10 employees working in the company then only the organization is eligible to give a gratuity to the employee (i.e. full-time employees or part-time employees).
Following are some conditions of when an employee will be eligible to obtain gratuity.
When an employee retires.
An employee resigns after working for 5 years or more than 5 years with the same employer.
An employee dies or suffers disability due to disease or casualty.
Gratuity is given to the servicemen under any level of working for a particular sector and having a minimum salary of 1 lakhs per annum.
Gratuity is also applicable to the people doing services like part-time employees, servants, drivers, teachers, and in many more sectors.
part-time employees eligible for gratuity in India
When an employee will not be eligible to obtain gratuity.
The person working as a consultant and the TDS is applicable on their does not get the gratuity.
How to Calculate Gratuity?
The formula is supposed for the calculation of gratuity amount for an employee on the basic salary of the employee is given as follows:- Gratuity Amount = (15 * Last drawn salary amount * period of service) / 30 For example, if you have worked with a company for 10 years and had Rs.30,000 as your last drawn basic plus DA amount, then, Gratuity Amount for you = 15*30,000*10/30 = Rs.150,000. The number of days worked with the organization is calculated as the number of months in which an employee is employed above 6 months is rounded off to the next number while it is below that 6 months in the last year of employment is rounded off to the last lower number. Gratuity has not been given on the CTC. It is given on the basic salary and it includes commission and allowance.
Process for Gratuity payment
There are a total of three processes involved regarding the gratuity payment of an employee by the organization.
The authorization of an employee must be sent in an application to the organization regarding its gratuity.
As soon as the request is received, the organization which owes gratuity will examine the amount and the acknowledgment will be sent to the same individuals regarding gratuity.
After sending the acknowledgment the employer has a period of 30 days to pay the gratuity amount to the individual.
Penalties for delaying payments to the organization
The rate of 8% per annum is paid by the employer if the payment is made within four weeks, delaying the rate of interest at the rate of 10% per annum.
The Employee of the organization knowingly ignores the date of delivering the gratuity of the other employee. Then there is the punishment of imprisonment for 6 months and a penalty of 10 thousand rupees.
Reference cases of courts in regards to gratuity
Delhi High Court Directs Payment of Gratuity to Retired Part-Time Vocational Teacher National Bal Bhawan vs Vandana, Delhi High Court,2019 judgment. The Delhi High Court in Janardan Sharma vs GNCT of Delhi Through its Chief Secretary & Ors. [WP(C) no. 11154 of 2019] pronounced that the Payment of Gratuity Act, 1972 “does not distinguish between full-time employee / a part-time employee/ad hoc employee etc.” and directed the respondents to pay gratuity to the petitioner, a retired part-time vocational teacher. hence part-time employees are eligible for gratuity.
As per the Section 1(3)(b) of The payment of Gratuity Act,1972 Gratuity applies to the following sectors job:-
(a) Every factory, mine, oilfield, plantation, port, and railway company.
(b) Every shop or establishment within the meaning of any law for the time being in force about shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.
(c) Such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify on this behalf.
Payment of Gratuity: As per the Section 4 of The payment of Gratuity Act,1972 To compute the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period after his disablement shall be taken
Payment of Gratuity: As per the Section 4(6)(b) of The payment of Gratuity Act,1972 Free for one month and pay only if you like it. If the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
Payment of Gratuity: As per the Section 53 of The Code on Social Security, 2020 According to provisions of the Payment of Gratuity Act 1972 (a), companies were liable to pay the gratuity irrespective of employment type after 5 years of service but under the new provisions of Chapter V of Social Security Code 2020, companies will be liable to pay gratuity immediately to Fixed Term Employees.
Under section 256(1) of the Income-tax Act, 1961 Shree Sajjan Mills Ltd vs Commissioner Of Income Tax, M.Pon 8 October 1985 the extent of actual payment which came to Rs. 24,366 towards payment of gratuity to the employees during the relevant provision for gratuity or a fund for gratuity. He might create an approved gratuity fund for the exclusive benefit.
More information regarding Gratuity
Following are some of the most prominent about the payment of gratuity by an employer to fanservice.
An employee can receive a gratuity amount higher than Rs.10,00,000 from his/her employer comes under taxation.
In the Budget of 2019, Finance minister, Mr Piyush Goyal declared openly that the existing tax-free gratuity limit will be increased to Rs.30 lakh.
If any misconduct received against an employee by the employer then, the employer can reject the payment of gratuity if the employee
In the case of the death of the employee, then the gratuity amount will be transferred to the nominee of the gratuity.
FAQs
1)What is the new rule that comes under gratuity? Ans. According to the new law, the allowances of an employee cannot exceed 50 per cent of the total salary. To comply with this rule, employers will have to increase the basic salary of their employees by 50 per cent. 2)Is 4 years and 11 months eligible to get gratuity in a part-time job? Ans. Yes, the employee is eligible to take gratuity. if he/she completed more than 150 days of working with the same organization. 3)What is the period of payment of gratuity by the employer after retirement and registration of the employee? Ans. The employer shall manage to pay the gratuity within thirty days from the date of full and final settlement of the employee. 4) What is the formula for calculating the 2022 gratuity of the employee? Ans.Gratuity Amount = (15 * Last drawn salary amount * period of service) / 30 5)Are temporary and part-time employees eligible for gratuity? Ans. Every employee is eligible for gratuity that completes their 5 years and more in the same company.or part-time employees are eligible for gratuity. 6)If an employee served in a company for 7 years as a full-time employee and his work has changed to a part-time employee then would he get any gratuity or not? Ans. Yes, The employee gets gratuity for 7 years of a full-time job. Later on, an employee may be considered a part-time worker of the organization, and gratuity will be given based on the part-time job.
Summary
Article Name
Are part-time employees eligible for gratuity in India?
Description
Gratuity is an advantage which is owed by the employees of the company under the Payment Act of 1972 for Gratuity. Let us discuss the basic definition of gratuity: It is an amount of money delivered by an employer to an employee for their duties contributed to the company. But, it applies to the employee only in this case to complete five or more years with the same company. Gratuity is also implemented on the people working in a part-time job for five or more 5 years.
All type of employees casual, ad hoc, or part-time employees are entitled to gratuity
Yes, part-time employees are eligible for gratuity in India.
Sometimes the condition where the employees completed their 5 years but instead of that the employee will not be eligible for gratuity payment because he /she has been terminated due to violent conduct wherein, he/she tries to physically harm someone during the employment.
