Ludhiana Fashions Pvt. Ltd. was incorporated in the year 2000 as a Private Limited Company. On account of its increased turnover and expansion, it was converted into a Public Limited Company and now known as Ludhiana Fas

CS Professional · Labour Laws & Practice · PYQS · June 2025
Ludhiana Fashions Pvt. Ltd. was incorporated in the year 2000 as a Private Limited Company. On account of its increased turnover and expansion, it was converted into a Public Limited Company and now known as Ludhiana Fashions Ltd. (LFL). Ludhiana Fashions Ltd. have 10 directors in its Board. Vanshika is the Managing Director of the Company. The Company is engaged in the business of manufacturing garments for young boys and girls. The company not even manufacture and sale in the domestic market but also have B2B selling in the European market under the brand name of 'Aha Fashions'. LFL have its factory in Phillaur, whereas the Registered office is in Ludhiana. The LFL's mission is to provide affordable garments with latest prevailing fashion trends and to promote the employment generation specifically for women. In order to fulfil its noble cause LFL has provided employment to the women and young girls who have been given the roles as managers, supervisors and workers as per the qualifications and experience of the candidate. Thus, the LFL is promoting empowerment and financial stability among the women. LFL has various divisions in its manufacturing plant which includes the cloth purchase division, cloth cutting division, garment stitching division, ironing division, packing division, storage and distribution division. Sangmitra is the overall head of the factory. Her responsibility is to oversee the work flow of each of the division and to ensure smooth functioning of the same. Besides this, she also takes care of the leave management of the staff working in the various divisions, and making arrangement of the proper relieving staff. The work load in the factory increases as and when the festive season comes and demand of the LFL make garment increases. During the festive season usually, the workers are encouraged to give focus on the targeted production and not to take leave. In garment cutting division, Radhika is the Division Head. Radhika's work in the LFL is to take care of overall responsibility of cutting the cloth to different size as per the requirement for its final stitching. When the Diwali time was approaching near, Radhika's father called her over phone and informed that her mother has slipped down from the stairs and has been hospitalised. Radhika's native place is near Jaipur and she thought of going Jaipur by air to save time, so that she gets more time to look after her mother. She forwarded her leave application to Sangmitra (who is overall head of factory divisions). Sangmitra declined the leave application of Radhika without knowing the reasons and shouted on her narrating how she dared to apply for the leave at this festive time, when the management is committed to fulfil the domestic as well as export demand of the garments. As cutting of the clothes is the first stage of tailoring and stitching and if this step is not taken care of in priority the rest of the process will not start functioning, so Sangmitra advised her to take leave only after the end of the festival season. Radhika again requested that it is really urgent on account of the hospitalisation of her mother, but Sangmitra without paying any attention to Radhika's request, abused her and passed on her unwelcomed personal remarks about her integrity and character and told that earlier also she had fabricated false stories for availing of leave. Aggrieved from this Radhika made a complaint of sexual harassment against Sangmitra before the Internal Committee formed by the LFL under the provision of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). The Inquiry Committee summoned both the parties and after a long deliberation recommended for suspension of Sangmitra. The management took cognizance of the report given by the Internal Committee and Sangmitra was suspended on 1st January, 2024. Before the suspension she was getting a monthly salary of ₹ 50,000 per month. After submission of the written apology and withholding one grade increment, Sangmitra was reinstated in the service with effect from 1st October, 2024. The Board of the LFL recently approved the construction of its second factory premises in the industrial area of Ludhiana. The necessary machinery and electrical equipments were imported and installed in the new factory premises. The promoters of the Company want to start functioning of the new manufacturing plant with effect from the 15th August, 2025. Vanshika who is Managing Director of the Company nominated Ajay (who is Manager, stationed at Registered Office of the Company at Ludhiana) as the Occupier of the new factory premises. Avantika joined the LFL as Supervisor of Packaging Division. She was to supervise the overall work of packaging of the garments. Very soon she realised that the employees are being exploited by the management and no one has courage to raise their issues. A few workers working in same Division decided to form a trade union. Meanwhile the management came to know that few workers are in the process of formation of Trade Union in this industry, so they called up a meeting of the employees and conveyed the message of the management. It was emphasized about the penal provisions and expulsions from the services if anybody is found involved in the formation or association with any Trade Union. Ishika, is working in the Ludhiana Fashions Ltd. as Marketing & Recovery Officer (MRO) since 1st August, 2019. Ishika applied for maternity leave from 1st December, 2024 to 31st May, 2025. Her expected date of delivery as per doctor's report is 10th January, 2025. Ishika is already having 2 children. The HR Deptt. of the Company declined the maternity leave application of Ishika informing her that the maternity leave benefits with wages cannot be granted to a woman who is already having 2 children. However, she can avail the leave without wages. Aggrieved from this, Ishika tendered her resignation to the Company on 10th March, 2025 and also demanded for payment of gratuity. Based on the facts of the above, answer the following questions: Whether Ishika is entitled to get the payment of gratuity amount for the period she served in the Company ?

Answer & Explanation:

Answer 1(e)(iv) Section 4(1) of the Payment of Gratuity Act, 1972 provides that 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, - on his superannuation, or on his retirement or resignation, or on his death or disablement due to accident or disease. Section 4(2) provides that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned. In the given case Ishika joined the company on 1st August, 2019 and tendered her resignation on 10th March, 2025. Therefore, from 1st August, 2019 to 9th March, 2025 she has served in the Company for 5 years, 7 months and 9 days. Further, in terms of explanation (iv) to section 2A(2) of the Payment of Gratuity Act, 1972, Ishika shall be not be treated on leave without wages during the period of 1st December, 2024 to 22nd February, 2025 since she is entitled for the maternity leave with wages as per the Maternity Benefit Act, 1961. (The answer is prepared taking actual days in a month.)

Topics: Payment of Gratuity Act, 1972

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