I have the following views on the Payment of Gratuity Act 1972.
a) whether gratuity act is applicable to contract labour
b) whether it is applicable to fixed tenure contractual appointments

In my view a plain reading of the Act shows that in both above cases it is not applicable.This is because Contract labour is not in the employment of the Contractor.They are only Contract labour as defined under the Contract labour Act which gives them special status under the Contract labour Act and hence are eligible only for the benefits specified under the Contract Labour Act which are PF & ESI/Workmen's compensation only.They are not eligible for gratuity,or bonus.

As regards tenure contractual appointments they are also not eligible for gratuity for the reason that the events on the occurrence of which gratuity is payable under the Act are
1.Resignation
2)Retirement
3)Death
4)Superannuation
5)Termination

Now expiry of tenure of employment is not a defined occurence for payment of gratuity and therefore it would not be payable.

Any views on the above interpretations ?? Any case law to support or reject these ??
Surabh

Hi Sarabh,

You have raised a very interesting point. Although, technically, the non renewal of contract may not amount to resignation, termination, or retirement, an employee employed by a contractor is covered under the Payment of Gratuity Act, and hence cannot be denied the gratuity on his completion of 5 years of continuous service. His non renewal of contract may perhaps be treated as his retirement from service.

As regards the Fixed term employment, the Act clearly makes a provision that in case the employee ceases to be in employment before completing n 5 years of service, he will be entitled to pro data payment for the period he was in service.

In my previous employment, we had occasion to dispute the payment of gratuity to contract labour even after completion of 5 years of service, and the matter was referred to the Asstt Labour Commissioner. We were directed to make the payment as per the provisions of gratuity Act. I am sure there must be High Court/Supreme court ruling on this subject. I will check this up and give you a further feed back.
Seema