Gratuity when employee transfer within group company

What happens to gratuity when a employee gets transfer within one of group company ?


Gratuity need not be transferred when each company is a separate entity.
Thank you.


Hi Manjunath,

As per the Payment of Gratuity Act, and Rules:
Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,–
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Sub-clause (5) states that - Nothing in this section shall affect the right of an employee receive better terms of gratuity under any award or agreement or contract with the employer.

Therefore, an employee when gets transferred within one of the group company, the understanding and arrangements within such Group Company has to be in place so that such benefits are structured in alignment with the transfers.

When the 4 Labour Codes becomes effective, as per the new gratuity rules under the Social Security Code, the employees will be enabled to transfer the gratuity benefits as well like that of the EPF benefits.

Bhuvana Anand