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Gratuity Act is applicable to establishments covered by Factories Act
December, 07th 2007

Notwithstanding non-applicability of Payment of Gratuity Act, 1972 to units having less than 10 workmen, units covered by the Factories Act, 1948, were to apply the gratuity law to their workers, the Madurai Bench of the Madras High Court has held.

Agreeing with the decision of the Joint Commissioner of Labour, Madurai (Appellate Authority under the Gratuity Act), that Section 1(3)(a) of the Gratuity Act was applicable even to establishments having less than 10 workers, under notification dated September 9, 1967 of the Department of Industries, Labour and Housing, Tamil Nadu, extending the Factories Act to all tailoring units in the State, Mr Justice K. Chandru ruled that the contention of writ petitioner (Star Tailoring, Tirunelveli) that Gratuity law would not apply to his units had to be rejected.

It was an admitted fact, the Judge said, that the State Government had issued notification under the Section 85(1) of the Factories Act covering tailoring units. Notwithstanding the fact that the petitioner had less than 10 workers, the Payment of Gratuity Act would apply to them in all respects.

According to the petitioner, inasmuch as 2nd respondent (Asst Commissioner of Labour, Tirunelveli - controlling authority under the PG Act) had held that the PG Act did not apply as it was not covered by the Section 1(3)(b) of Act, order of Appellate Authority was wrong.

The Judge said that it was only for coverage under the Section 1(3)(b) of the PG Act, minimum number of workmen were required.

In respect of Section 1(3)(a), the Act is applied to all establishments including a factory. Tailoring establishment was also a factory as per the State Governments notification.

In view of the above, the writ petition failed, and the same was dismissed.

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