Payment of gratuity act
SRIDHAR N L
(Querist) 09 June 2013
This query is : Resolved
An employee heading HR has by influence (Her husband being a LIC agent) has given fictitious amount i.e. entire salary i.e. irrespective of Basic salary and made the management to pay premium for the entire amount. As per the Payslip the salary paid is split up into Basic, HRA , Allowance etc. he salary is around Ra.35,000/- and Basic is Rs.9,000/- for more than a year before his resignation. From the LiC the amount was recieved for the full amount (as per the wrong calculation made). The company paid the Gratuity legally i.e. on the last drawn BASIC and calculated for her service and paid. At present she is suing the company for the entire amount which was given wrong and paid by LIC.
Can we say that the amount paid by LIC was wrong and the Gratuity paid as per law as per Payslip and her salary.
Sridhar N.L.
9551016279
Raj Kumar Makkad
(Expert) 09 June 2013
The management is not bound by the wrong decision of LIC and can bring the facts before the court if any law suit is filed by such employee.
Rajendra K Goyal
(Expert) 09 June 2013
The Gratuity is as per entitlement and any wrong decision of LIC does not change the entitlement,I doubt that any relief would be granted in legal process.
Kumar Doab
(Expert) 09 June 2013
-------Learned experts have given valuable advice.
Since we chanced upon a judgment it is felt that it is pertinent to place it before the experts for evaluation of the merits as per this judgment.
The purpose of this post is only to discuss and learn and is not aimed to argue.
Kindly allow to point out from the following judgment:
Kerala High Court
Nedupuzha Service Co-Operative ... vs K.Rugmani,Aged 59 Years on 30 May, 2011
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA.No. 980 of 2010()
Which can be accessed at :{ http://indiankanoon.org/doc/77470836/}
This judgment was also shared by LCI Expert Advocate Mr. M. Bhadra in the following thread:
http://www.lawyersclubindia.com/experts/Gratuity-387136.asp#.UbSiw-eAqWM
The learned judges in the Honor’ble court decided:
‘employees are entitled to the maturity value of the gratuity policies’ as at7.
The extracts from the judgment are reproduced below:
The appellant Banks claim that the Policies are taken by them and their liability is limited to the statutory limit and excess gratuity amount received under the individual account of the employees over the statutory limit should go to the appellants.
The employees, on the other hand, contend that they are entitled to the entire amount payable by the LIC for the policies taken by the appellant Banks.
The learned Single Judges directed the appellants to pass on the entire benefits received from the LIC in the individual accounts of the employees to them.
Besides W.A.Nos.980, 982 of 2010 & connected cases -6-this, none of the respondent employees have a case that the gratuity received by them under the Policies taken by the appellant Banks with the LIC is less than their entitlement for gratuity under the Act.
This Court in the decision in Retnavalli v. Ambalapadu Service Co-operative Bank Ltd., reported in 2005(3) KLT 320, held that the circular is bad and the employees are entitled to maturity amount under the LIC policy, which may be in excess of the maximum gratuity
W.A.Nos.980, 982 of 2010 & connected cases -7-provided under the statute under Section 4(3) of the Act. 5. In these batch cases, so far as the judgments under appeals are concerned, the learned Single Judges followed the above referred judgment of this Court and held that employees are entitled to the maturity value of the gratuity policies and the Banks are not entitled to withhold the same.
We have already noticed that the terms of the LIC's Group Gratuity Scheme under the Policy offered by them are advantageous to the employees by virtue of the life insurance coverage and the guarantee even in the event of liquidation of the Society. However, we do not think the employers can claim the benefit of the Group Gratuity Policy taken by them for the benefit of the employees.
7. In W.A.No.1924/2010, learned counsel appearing for the respondent employees submitted that accumulated amount received from the LIC by the appellant Bank is more than what is paid to them. This is a matter for verification.
Since the appellant's counsel disputed this position, there will be a direction to the LIC to furnish details of the accumulated W.A.Nos.980, 982 of 2010 & connected cases -11-amounts accrued in the account of the respondents i.e. passed on to the appellant, and if any amount in excess of the amount paid to the respondents was received by the appellant Bank, the same should be forthwith passed on to the respondents.
The respondents can claim the amount based on the information received from the LIC.
------ -----Payment of Gratuity Act, 1972: Section: 4: Payment of gratuity.
(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
-------The LIC agent does not issue the policy. The LIC agent can not issue a policy.
NO policy is issued until or unless it is cleared by the underwriters that policy can be issued.
Leave apart an agent even the MD of the company can not issue a policy until or unless it is underwritten by the underwriters.
Is it possible that in the case being pointed by author Mr. Shridhar, the underwriters connived with LIC agent of the lady in HR.
The question arises that the HR personnel do not at all or do not alone pass the amounts to be paid to an entity. The due diligence process of a company would involve many steps to prevent business risks…………
LIC on its part seemed to have washed its hands by paying entire sum, to prevent dirty linen being washed in public.
However LIC as an expert in the picture could have rendered an advice.
On the other hand LIC has advertised:
The gratuity arrangement with LIC provides the following services to the company
• Claim settlement on exit as per company rules/gratuity act
It may conveniently state that as per company rules { and /or Payment of Gratuity Act, 1972: Section: 4(5)} the a/c was managed and maturity payment was disbursed.
------Apparently the separated employee and/or her counsel have chanced upon the lawful/factful points and that is why they have decided to sue.
If the case is decided the fraternity shall have another judgement to rely upon.
------Company may have to pay.
Valuable advice of experts is sought.
Isaac Gabriel
(Expert) 11 June 2013
It is presumed that the management had collected and paid the premia calculated for the employee to the LIC under the Group Gratuity scheme.In such an event,the employee is not at fault for the wrong payment.Further,there is no loss to the management since the LIC has paid the gratuity liability in full.
