Contract Employees Gratuity Payment

Required opinion & clarification:

  1. If an employee worked on a contract basis continuous ( 7day Gap for every contract renewal) 5 years service in a particular organization. is eligible for gratuity as for act?
  2. A permanent employee who worked 4 years 9 months is eligible for gratuity as for act?


  1. If the employee has been on the third party contract then principal employer need not to look into same.
  2. Yes, 4 years 8 months completion is the gratuity eligibility criteria.

thank u sir, but we hiring contract staff directly not third party.


Hi @palraj

“Continuity of service or continuous service is a fact to be determined on the basis of subsisting substantial employment relationship of employer and employee without any break over any particular stretch of period from the beginning to the end”

Since your contract employees are renewed with a break of 07 days it does not come under continuity of service, hence ‘Gratuity’ may not be required even if they work in the same company, but with a break.

Second scenario for regular employees, Yes it has to be given and they are eligible.

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