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payment of gratuity act  


The payment of gratuity act concerns shops, establishments, factories, plantations etc. what about other organisations, like a college or say a consultancy firm ?


Gratuity Act is already in application in the in the private schools and colleges. Further u/s 1(3) any establishment employing 10 or more employees in the preceding 12 months will be covered under the Gratuity Act.

In Habibia Girls Primary Schools V. Noorinisha, (2004) 2 LLJ 398 (Mad), it was held that schools whether aided or otherwise, is an establishment within the meaning of section 1(3).

In another case, Laxmi D. Vs. A.P. Agricultural University, (2002) 1 LLJ 69  that carried on an organised and systematic activity by employing more than ten persons, held to be 'establishment' within the meaning of section 1(3)(b).

But it will not be the case in any Solicitor's law firms. Here as the Chartered accountants or the Company secretary as do analogous activities with regards to the Solicitors/Advocates will be excluded from the purview of the Gratuity Act. (Ramanathan vs State Of Kerala link:-  https://indiankanoon.org/doc/1488314/).

Again in Association Of Property vs Delhi Development Authority the Delhi High Court held that 'Professional Consultancy' firms are outside the scope of the Gratuity Act. It laid the following professional consultancy bodies, which may also can be referred from the below ink provided: -

"(bb) 'Non-nuisance professional consultancy' means an activity' carried on by an individual by his personal skill and intelligence and includes-

(a) Doctors (without Nursing Home);

(b) Lawyers;

(c) Tax Consultants;

(d) Architect (without studio);

(e) Contractor Consultants'

(f) Chartered Accountant/Company Secretaries;

(g) Property Consultants;

(h) Government Guides."

Link:-  https://indiankanoon.org/doc/601645/


The Gratuity Act is applicable to any shop or an establishment as defined under the concerned State's S&E Act [Ref. S 1(3)(b) of the Gratuity Act], but do not include the consultancy firms by individuals or body of individuals carried on activities depending on their professional knowledge and skills. As those are not shop or establishments.

Pradipta Nath


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