Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Septem (Project Manager)     24 November 2010

Can Employer deny Gratuity ?

Hello Experts ,

I was working in pvt ltd software IT company having strength of around 150 people..and got relieved from a company after 7 years of continuous service as permanent employee. But I was not given gratuity from company and my HR director stated following reason for the denial..

  1. As per the director our company do not have gratuiety in its policy hence it will not be given.
  2. My CTC in the company did not have any component such as 'Gratuity' as well as 'Provident Fund' so as per him everything was given in hand in monthly salary and no seperate gratuiety will be given (Although there is no head called 'gratuity' in monthly payslips).

To my understading of act, gratuiety is over and above the CTC and is not related to its breakups in to various components, further I think its law and something which can not vary as per company policies but with only compulsion that one should complete 5 years of service...

I'm the first one in company who was entitled for such claim...

Someone on the forum please guide me if is it legal to deny the gratuity due to above reasons? and can employer even deny the benifits?
if yes, then in what all cases ?
if no , what options I have to get my gratuiety which is my rights?

Thanks in advance..






Learning

 19 Replies

Rashmita Saikia (Lawyer)     24 November 2010

you are eligible for Gratuity, the Payment of Gratuity Act is applicable to the Companies/establishments where 10 or more persons are employed. The Companies has to give gratuity to the employees whoever complete 5 years of continuous service in the company.

Pathikrit Naha (DGM - HR & ADMIN)     24 November 2010

You are entitled for gratuity.

You should approach by witten petition to the employer & then with that document apply to Inspector under grauity act. You should mark a copy to area labour commissioner also & persue time to time.


(Guest)

Dear Sir,

I am enclosing some gist of Gratuity Act,1972. You are eligible for gratuity for this act. You need to send a official letter demanding the gratuity from your company. You will also have to mention the time period for which you worked in this company. Once they reply your letter you sort out future course of action. The circumstances under which the employer can reject the claim is also enclosed for your perusal.

Regards,

Vivek

 

The Payment of Gratuity Act, 1972 applies to factories and other establishments employing ten or more persons. On completion of five years service, the employees are entitled to payment of gratuity @15 days wages for every completed year of service or part thereof in excess of six months subject to a maximum of Rs.3.50 lakh. The current maximum limit is applicable from 24.9.1997. The wage ceiling for coverage under the Act has since been removed w.e.f. 24.05.1994.

 

The Payment of Gratuity Act 1972 applies to the whole of India and so far as it relates to

ports and plantations it does not apply to the State of Jammu and Kashmir. It applies to:

(a) every factory, mine, oilfield, plantation, port and railway company.

(b) Every shop or establishment within the meaning of any law for the time being in force

in relation to shops and establishment in a State, in which 10 or more persons are or were

employed on any day in the preceding 12 months.

(c) Such other establishments or class of establishment, in which 10 or more employees

are or were employed on any day in the preceding 12 months, as the Central Government

may notify in this behalf.

Any shop or establishment shall continue to be governed by the Act even if the no. of its

employees comes below 10 persons at any time in the future.

 

 

Payment of Gratuity

Gratuity shall be paid to an employee on the termination of his employment after s/he has

rendered continuous service of not less than 5 years i.e. on superannuation, retirement,

resignation, death or disablement due to accident or disease (Sec 4).

The period of 5 years is not necessary if the termination of the employee is because of

death or disablement. In the case of death the amount is paid to the legal heirs

“Continuous Service” means uninterrupted service which may be interrupted on account

of sickness, accident, leave, absence from duty without (not being treated as break in

service), lay-off, strike, lock-out or cessation of work not due to the fault of the

employee. (Sec 2A).

 

Calculation of Gratuity

Gratuity is calculated at 15 days wages last drawn by the employee for each completed

year of service. The monthly wage is divided by 26 and multiplied by 15. In computing a

completed year of service the period in excess of six months shall be taken as a full year.

Gratuity = Monthly salary x 15 days x No. of years of service

26

Maximum

 

Forfeiture of Gratuity

Gratuity can be forfeited {Sec 4(6)} where an employee has been terminated:

(i) for any act, willful omission or negligence causing any damage or loss to or

destruction of any property belonging to the employer, to the extent of such loss or

damage.

(ii) for riotous or disorderly conduct or any act of violence on his part.

(iii) For any act which constitutes an offence involving moral turpitude, provided the

offence has been committed by him in the course of his employment.


(Guest)

Dear Sir,

One more thing. in the recent amendment of Gratuity act the limit has been enhanced.

Regards,

Vivek


(Guest)

Dear Sir,

The Sample format is attached for your perusal. Fill this and send this to your employer. If they reject your claim they will have to record the same in Form M and subsequently you can approach concilation officer.

I hope this helps.

Regards,

Vivek

 

 

Payment of Gratuity (Central) Rules

FORM ‘I’

See sub-rule (1) of Rule 7

Application for Gratuity by an Employee

To,

(Give here name or descripttion of the establishment with full address)

Sir/Gentlemen,

I beg to apply for payment of gratuity to which I am entitled under sub-section (1) of Section 4 of the Payment

of Gratuity Act, 1972 on account of my superannuation/retirement/resignation after completion of not less than

five years of continuous service/total disablement due to accident/total disablement due to disease with effect

from the Necessary particulars relating to my appointment are

given in the statement below.

Statement

1. Name in full

2. Address in full

3. Department/Branch/Section where last employed

4. Post held with Ticket No., or Serial No., if any

5. Date of appointment

6. Date and cause of termination of service

7. Total period of service

8. Amount of wages last drawn

9. Amount of gratuity claimed

2. I was rendered totally disabled as a result of---

(Here give the details of the nature of disease or accident)

The evidences/witnesses in support of my total disablement are as follows:--

(Here give details)

3. Payment may please be made in cash/open or crossed bank cheque.

4. As the amount of gratuity payable is less than rupees one thousand, I shall request you to arrange for

payment of the sum due to me by Postal Money Order at the address mentioned above after deducting

postal money order commission therefrom.

Yours faithfully,

Signature/Thumb-impression of the

applicant employee.

Place:

Date:

1 Like

V. VASUDEVAN (LEGAL COUNSEL)     24 November 2010

You are entitled to Gratuity. Send a notice claiming for gratuity addressed to the CEO/Managing Director of the Company by registered/speed post with acknowledgement. You can write this notice in simple language and if the company does not reply, file a complaint with the commissioner under the gratuity act - the regional labour commissioner/assistant commissioner would be the designated authority.

vasudevan

1 Like

Septem (Project Manager)     25 November 2010

Thanks everyone..thats was very helpful..

mahesh pandey (Vice President)     25 November 2010

Friend, u are entitled 4 gratuity under payment of gratuity act,1972. Plz apply 4 claim of gratuity in prescribed

Form-I to CEO or MD OR Manager immediately  within  30 days under Regd A/D & if there be no response or if they deny ur claim then after 30 days of filing such claim 4 gratuity u can approch & file ur complain of non payment of  gratuity in prescribed Form -N ( Application 4 Direction) before Controlling Authority under the payment of gratuity Act .

Tks

Mahesh

Deepali N (Senior Executive-Accounts)     28 January 2011

hi,

you have not mentioned clearly what does "continous service of 5years" mean? what does Law interprete for 5 years. i have worked for a MNC for the period of 4years & 325days in fifth year. am i eligible to claim gratuity. can my employer deny the claim? on what grounds? does company has liberty to deny claim based on their rules/regulations? pls advise in my specific case.Pls advise as early as possible thank you.

Kirti Kar Tripathi (lawyer)     28 January 2011

 

An employee is entitled for gratuity  on account of services rendered by him with the employer. It is his statutory rights available to him under the Payment of gratuity Act. For which no gratuity scheme of employer is required. However, if the employer has any scheme and if the same is more beneficial then the provision of act, the employee is entitled gratuity under the scheme but he can not be deprived on account of non availability of any scheme by the employer.

 

Ramesh (Project Lead)     08 July 2012

Hi Vasudevan,

I have worked in IT compny for 6 years from Oct 2004 to oct 2010. When i was resigned i asked my HR manager abt gratuity amount like when should i get gratuity amount he said will let you know once the process is complete. i didn't get any confirmation/update from my HR manager, i called him on phone couple of times but i got he same old story from my HR manger. I sent an email in sept 2011 to HR mannager and MD still i didnot get any reply from them. Again i sent an email to them in June 2012 at this time they responded like will lt you know once the process is complete.One more thing i heard that they are planning to sell the company. Please guide me what action shold i take now to get my gratuity.

Regards
Ramesh M

Kumar Doab (FIN)     08 July 2012

@Septem

PF and Gratuity are covered under Social Security Laws. The gratuity act is to benefit the employee and employer should on its own arrive on a conclusion which benefits the employee.

Even if PF and Gratuity are not mentioned in your CTC the law is applicable. You may ask this HR manager and this Director “has their company been exempted? If yes they should confirm this to you in writing.

Some of the employers provide Superannuassion. You may ask this HR manager and this Director what is the policy and rules of this company on superannuassion and details of the trust managing the superaanuassion.

This HR manager is duty bound to impress upon his Director to disburse gratuity. You may enlighten this HR manager on:

Section: 9
Penalties.

(1)   Whoever, for the purpose of avoiding any payment to be made by himself under this Act or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both.

 

And

Section: 8
Recovery of gratuity.

If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify,] from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto :

And

(4)

(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.

Employer should disburse gratuity on its own id date of retirement is known to the employer within a month. If you had served notice of resignation your date of retirement was known to the employer. Employee can submit Form I to employer a month before the date of retirement if retirement has been planned and communicated.

Even if you are the first employee to stake claim employer shall have to disburse to all eligible employees. Employer seems to have defaulted as it appears employer has not deposited the gratuity amount with Controlling Authority for all eligible employees.

In addition you may stake claim to Superannuassion, if the employer and HR, doesn’t not reply to your query.

 

Kumar Doab (FIN)     08 July 2012

@ Ramesh

 

You have posted that:

--"One more thing i heard that they are planning to sell the company."

Rules of Payment of Gratuity:

3. Notice of opening, change or closure of the establishment.- (1) Within thirty days of the rules becoming applicable to an establishment, a notice in Form A shall be submitted by the employer to the controlling authority of the area.

 

     (2) A notice in Form B shall be submitted by the employer to the controlling authority of the area within thirty days of any change in the name, address, employer or nature of business.

 

     (3) Where an employer intends to close down the business he shall submit a notice in Form C to the controlling authority of the area at least sixty days before the intended closure.

 

     4. Display of notice.-(1) The employer shall display conspicuously a notice at or near the main entrance of the establishment in bold letters in English and in a language understood by the majority of the employees specifying the name of officer with designation authorized by the employer to receive on his behalf notices under the Act or the rules.

 

     (2) A fresh notice shall be displayed immediately after the notice referred to in sub-rule (1) becomes illegible or requires a change.

--"Again i sent an email to them in June 2012 at this time they responded like will lt you know once the process is complete."

Payment of Gratuity Act:

Employer should disburse gratuity on its own if date of retirement is known to the employer within a month. If you had served notice of resignation your date of retirement was known to the employer.

Employee can submit Form I to employer a month before the date of retirement if retirement has been planned and communicated. You may mention all previous communications by phone/email and term these as notices and claim despite representations and notices this HR manager and employer have not paid the gratuity and/or deposited with Controlling Authority. In the situation you have cited you should immediately submit form I under acknowledgment to employer with a copy to Controlling authority. If you have confirmed that employer is planning to sell the company you may immediately inform the O/o Labor Commissioner at your location and location of your employer. You have the liberty to charge this HR manager and employer of connivance to defraud the employees.

--"he said will let you know once the process is complete."

It is believed that employer has not charged you on any count for having caused loss on any count.


Attached File : 142174420 735419210 rulesofpaymentofgratuity(3).doc, 142174420 paymentofgratuityact(1).doc downloaded: 188 times

Kumar Doab (FIN)     08 July 2012

@ Deepali N,

SC and Madras HC judgments are enclosed.

SC judgement:

"hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."

 

HC judgements is also attached.

Kindly go thru a very informative thread at LCI:


Forum Home > Labour & Service Law > Gratuity > Clarity between gratuity eligibility service (5 or 4.8 yrs)?

 

at the following link:

https://www.lawyersclubindia.com/forum/Re-Re-Re-Clarity-between-gratuity-eligibility-service-5-or-4-8-yrs--28768.asp

Learned SC and HC have set aside the tantrums and opinions of employers and have reaffirmed the provisions of the act. Supreme Court and High Court have not disputed the provisions of the act. Both have precisely validated the provisions of the act. The controlling Authority of Gratuity understands the bare act and provisions and judgment of the courts.

 

 

 

 

 

 

 

Payment of Gratuity Act, 1972

 

Section: 2A
Continuous service.

For the purposes of this Act, -

(2) (a)for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than -

 

(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) two hundred and forty days, in any other case;

 

(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than -

(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) one hundred and twenty days, in any other case;

 

Explanation: For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which -

(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicab1c to the establishment;

(ii) he has been on leave with full wages, earned in the previous year;

(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment and

(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.

 

 

 


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  



Post a Suggestion for LCI Team
Post a Legal Query