umesh mishra (Manager) 20 January 2017

Ex-gratia / gratuity

Good evening sir. I was working with a transport company last one and half year from March 2015 to Oct 2016. In the month of September 16, the management took decision to lay-off few employees as company was incurring heavy loss and unfortunately I was also part of employees who were laid off. In my appointment letter, the salary breakup included basic salary, HRA, conveyance allowance, PF contribution by company and Gratuity contribution by company. Since now days all companies consider company contribution to PF and gratuity as their cost and include in CTC, same thing happened to me. As per Incorporation certificate the date of registration of the company is April 2013. It means it hasn’t yet completed five years. Then also it was collecting gratuity amount from employees salary, but the amount was used by company in its working capital and it was not deposited to any approved Gratuity Fund. Till September 2016, whoever left the organisation, they were paid the accumulated gratuity amount as “Ex-gratia” since neither company nor employee completed five years of service. I have been following for my Full and final settlement last two months and now they have confirmed me that it is ready and asked me to collect it. But to my surprise, “Ex-gratia” amount was not included in my F&F, as the HR said company has stopped paying this amount. This was shown as Gratuity cost and it is payable only after five years, so I am not eligible. Sir my query is when company itself asked me to leave the organisation, whether I complete five years or not, I should be eligible to get the “Ex-gratia”, as it was the practice till I was in service. The new rule which they have made was not applicable earlier. Secondly, the amount was shown as part of CTC in my appointment letter and company had deducted the same, but neither it deposited with any approved Gratuity fund, nor it paid us as monthly salary. So Can I claim the Ex-Gratia / Gratuity amount from company based on above facts or forget the amount. Please advise as based on the same I will have to sign the “No claim pending” letter before collecting F&F cheque.

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6 Replies

Kumar Doab (FIN) 20 January 2017

Has the employer issued notice of Retrenchment?

Or are you being asked to resign?

Or is employer instead issuing notice of termination?

umesh mishra (Manager) 03 February 2017

Dear Sir,

I was asked to submit resignation. They did not gave me any notice to retrechment.

I was asked to submit resignation on 15th September 2016. I was searching for new job in between and when I got offer letter from another company, I submitted my resignation on 10th October 16 and my last date at previous company was 18th Oct 16..

If I don't submit my resignation then they will not issue the Relieving letter, which is normally required when you join any new company.

I had been following for my dues through gmail with the management and I have written mail from the CEO of the company saying "The fact that you were asked to leave does not automatically entitle you to extra benefits outside the policy and your employment terms". The CEO has confirmed on mail that I was asked to leave the company, but he is not ready to pay either Ex-gratia or Gratuity or any other Retrechment benefits.

Please advise.

Kumar Doab (FIN) 03 February 2017

Do you have any rule/policy applicable to you for Ex. Gracia and being paid to other employees?

And change in rules, in writing?

Kumar Doab (FIN) 03 February 2017

Although Gratuity is mentioned in CTC, the deduction may not be mentioned in salary slip.

The written communication does place on record that you were asked to leave and it can become ground for termination.

The employer seems to be inclined to pay compensation as per service rules/conditions, applicable to your designation.

If possible try to accept in writing under protest and agitate later.

It is posted since you have an urgent need for relieving letter.

In any case Gratuity is @ 15 days salary/ year of service.

In your situation it is your call.

As a Manager you may not be eligible for retrenchment compensation.

Here as per facts of duties on record are to be examined for determining if you are covered by the def. of ‘Workman’ or not!

Discuss with local counsel specializing in Labor/service matters.

You can also try by speaking direct with employer than HR or involving employee's unions if any (of whihc you are a member).

umesh mishra (Manager) 03 February 2017

Thanks a lot sir for guidance. There was no policy in writing for paying the ex-gratia to employees, however it was a general practice that whenever any employees leaves the organisation before completetion of five years, then the accumulated amount of "gratuity" (As per appointment letter) was paid as Ex-gratia.

But since nothing in writing and law also doesn't help here, I may have to forget this amount.