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Payment of Gratuity

(Querist) 23 April 2011 This query is : Resolved 
Gratuity cannot be witheld or forefeited unless terminiated from service for misconducts.it is payable on superannuation as per section 4(1)(a).and no recovery could be made from gratuity. The retirement of employee is postponed for pendency of disciplinary action after superannuation and the management refuses to grant gratuity on attaining superannuation.Is it legally right?
Kirti Kar Tripathi (Expert) 23 April 2011
It is not all misconduct on which gratuity can be fortified. Gratuity can be forfeited only on on the ground, which are mentioned in Section 4(6) of the Act, i.e.

(6) Notwithstanding anything contained in sub-section (1), -
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.
(b) the gratuity payable to an employee may be wholly or partially forfeited]¬ -
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
Isaac Gabriel (Querist) 23 April 2011
The Gratuity Act holds superannuation and retirement as distinct features
4. Payment of gratuity.- (1) 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.
An employee superannuated can be prevented from getting his gratuity since relieved without being allowed to retire.Kindly enlighten.
Guest (Expert) 24 April 2011
Dear Isaac,

You have stated yourself that the retirement has been postponed. That itself means the date of retirement/ superannuation has been extended by the management.

It seems the employee was in private service, as in Government service retirement is not postponed in any case beyond the date of superannuation. Although the employee is retired on superannuation, but the disciplinary case continues and gratuity is withheld till the decision of the case.

So, you may have to seek the remedy on the question whether the retirement of the employee can be postponed beyond the date of superannuation or not. That you can find in your organization's Employee Handbook or the Employee Conduct & Discipline Rules.
Isaac Gabriel (Querist) 24 April 2011
Retirement can be postponed,but not superannuation.In this case both has been clubbed together.Gratuity needs to be paid on fulfilment of anyone of the criterionie.superannuation or retirement or resignation. As such, refusing gratuity is justified on the ground of non-fulfilment of the other? since nothing contained in anyother rule or act can contravene the Gratuity Act.
Kirti Kar Tripathi (Expert) 24 April 2011
In the present case, the retirement on attaining of age of superannuation is deferred till the disposal of the disciplinary proceedings, thus until disciplinary proceedings is not completed and final out come is not arrived, the employee concerned in the employment of employer and employees and employers relationship is not ceases to exist. thus the question of payment of gratuity will arise only when, the final out come of disciplinary proceedings is arrived.
RAJU O.F., (Expert) 24 April 2011
You have to wait till disposal of the disciplinary proceedings, to ascertain as to whether misconduct was proved or not.
Guest (Expert) 24 April 2011
Mr. Isaac does not seem to be satisfied with the opinion of any one of the experts. As such he is advised to have the interpretation through judgment of a competent court of law by filing a writ petition.
Isaac Gabriel (Querist) 24 April 2011
Thank you Mr.Dhingra.The Gratuity act holds superannuation and retirement are separate issues. As advised by you I shall try first with the competent authority in finding solution.Thank you all for having replied for my doubts.
Isaac Gabriel (Querist) 26 April 2011
Rspected LCI experts,The clarification for this query by the Asst.Labour Commissioner is furnished herewith.Thank you one and all.Private Message
Subject : Gratuity and superannuation
Message :
Sir, Well and wish the samewith you.It is a plesure to contact with you for doubts since your replies are specific and clear. Section 4(1)(a) stipulates gratuity to be paid on superannuation. But a superannuated employee is denied gratuity that he has not fulfilled section 4(1)(b).ie. he was not allowed to retire.The coop society is covered by gratuity act and he was not allowed to retire eventhough attained the age of superannuation.Is it right to club (a) and (b) together? This is not government service also.Can a petition be filed for payment of gratuity eventhogh not retired.When this was posted on 23/04/2011 in experts query in LCI I could not get clear reply.We abrbtly missed you for sometime.Kindly enlighten please.
Sent to : Sarjooram Sharma on 25 April 2011
REPLY
Private Message



Sarjooram Sharma


Assistant Labour commissioner
Since : 16 January 2010
Total Points: 421
Thanked: 37 times
Profile Visits: 1351


Subject : Gratuity and superannuation
Message :
The Gratuity can be claimed in case of retirement, superannuation, resignation and even in case of terminaton also if the services of employee have not been terminated due to acts mentioned under Section 4(6)(a) and/or 4(6(b).
From : Sarjooram Sharma


Kirti Kar Tripathi (Expert) 26 April 2011
There is basic difference between superannuation and retirement. superannuation relates with attaining of a particular age in terms of contract of service. whereas retirement relates with cession of employment. it may be due to reaching of age of superannuation or otherwise. i.e. Voluntarily retirement or computably retirement or by way of resignation etc.Normally when a person reach at age of superannuation, he is said to be retired. but is not so nor is compulsory that the employment of an employee automatically ceases to be ended on reaching of age of superannuation. there are several other circumstances, when the employment of an employee is not ceases on reaching of age of superannuation i.e. extension of service period due to requirement or will of employer or because of any extraordinary circumstances, when the employer thinks that keeping the particular employee is in the interest of organization or due to continuance of disciplinary proceeding. Thus the employment of an employee come to an end when the final order of termination of employment is passed. that may be retirement or punishment order. The basis principle for payment of gratuity is that the same is payable only when the employment of an employee come to an end. If the employment come to an end due to attaining of the age of superannuation, he is entitled for gratuity on attaining the age of superannuation and if the termination is on account of otherwise i.e. retirement or resignation, the same is payable after retirement or resignation as the case may be. Since payment of gratuity is a part of welfare scheme i.e. Payment of Gratuity Act or any scheme under the employment and the amount of gratuity depends on length of service. Thus period of employment is very much relevant and for this reasons if the retirement date is exceeds from the date of superannuation the same is taken into account for the purpose of calculation of gratuity.


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