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SANTHOSH   07 December 2020

Refund of excess gratuity amount

Sir,

I worked in a private limited company from 2014 to 2020 for a period of 6 years in Delhi with the post of clerical staff/stenographer/back office coordinator. After leaving the service I got the gratuity of Rs. 108346 on the last monthly gross salary of Rs 31300/-. (31300/26) x 15 x 6.  But as per the rule the gratuity  to be calculated on the basic salary.  

During the year 2018 my basic salary was Rs 28000/- + other components total to Rs 30000/-. But in the year 2019 the basic salary has been reduced to Rs 16000 with all other components totalling to Rs 31300/-.

Now the company is requesting for the refund of excess amount in gratuity as received by me.

I do understand that once the basic salary is fixed, it remains same. or it can be reduced ? If possible what are guidelines ?  

Some  of my colleagues informed that as per my profile the basic salary during the year 2019 is Rs 19000/-. and this will be applicable.   

What is the best available remedy.

I wait your valuable suggestions.

SANTHOSH



Learning

 9 Replies

Isaac Gabriel (Advocate)     07 December 2020

Gratuity is to e worked on the basis of the last pay drawn and as such your gratuity was rightly calculated. No question of refund arises.If diputed file a petition before the controlling authority.

SANTHOSH   07 December 2020

Sir. Let me clarify again... Gratuity is calculated on the last monthly basic salary.   Once basic is fixed , it can not be reduced.  If by any chance an employer reduces the basic salary then is it challenge able.?.  From Jan 2019 till July 2020 I  received the increased salary of 31300 with reduced basic of rs 16000/. as compared. to rs 28000 basic during year Jan 2018 till Dec 2018. is  legally valid?. Is there any notification or court order or any support document thereof to justify this point.

 

 

Dr J C Vashista (Advocate)     09 December 2020

Originally posted by : SANTHOSH
Sir. Let me clarify again... Gratuity is calculated on the last monthly basic salary.   Once basic is fixed , it can not be reduced.  If by any chance an employer reduces the basic salary then is it challenge able.?.  From Jan 2019 till July 2020 I  received the increased salary of 31300 with reduced basic of rs 16000/. as compared. to rs 28000 basic during year Jan 2018 till Dec 2018. is  legally valid?. Is there any notification or court order or any support document thereof to justify this point.

 

 

Calculation of gratuity is based on last "basic pay" which can not be reduced arbitrarity all of sudden.

Challange the notification, if any.

It would be better to consult and engage a local prudent lawyer practicing service cases for analysing facts/ document, professional advise and necessary proceeding.

1 Like

Ritesh Maity (Labour Law Advocate)     09 December 2020

Gratuity is payable on the last drawn salary i.e. (Basic + DA).

In my opinion, once basic is fixed, it cannot be reduced arbitrarily. In your case it seems that employer with malafide intention and to reduce liability towards statutory compliance has only reduced the basic pay though keeping your overall salary intact and this entire process adopted by the company may easily come unfair labour practice. 

I believe there is no provisions under the Payment of Gratuity Act to seek for refund of excess payment made to the employee. Unless the company request you in writing or through any legal notice, you may remain idle. Once you get a notice/ letter, you may consult a labour law advocate to deal with the same.

To me the only way to recover the excess payment is through a money suit for which one has to incur cost as well as time. So from practical sense I do not think your ex-employer will drag you to court for this small amount of so called excess payment. And you have a good case to defend too.

 

1 Like

SANTHOSH   09 December 2020

Originally posted by : SANTHOSH
Sir. Let me clarify again... Gratuity is calculated on the last monthly basic salary.   Once basic is fixed , it can not be reduced.  If by any chance an employer reduces the basic salary then is it challenge able.?.  From Jan 2019 till July 2020 I  received the increased salary of 31300 with reduced basic of rs 16000/. as compared. to rs 28000 basic during year Jan 2018 till Dec 2018. is  legally valid?. Is there any notification or court order or any support document thereof to justify this point. 

Sir,  is it necessary that I should get an increment letter in writing from the company with hike in total salary but reduced basic ?  The company have the full record showing that I received the total salary of Rs 31300/ with basic 16000/-. from Jan 2019 till my resignation.  Once I worked in a organization with reduced basic and it is a clear acceptance of revised terms and conditions.    They might have given the increment letter but cant trace it from my end.  If the ex employer gives any document with my receiving, is there any implications ? I have the full account statement mentioning that the  total salary has been credited in my account.   Kindly give us your view points.  

Pradipta Nath (Advocate)     10 December 2020

You stated Company having the record on your basic and you have bank account credit details. What about the pay slips? What were the segregations over there?

SANTHOSH   11 December 2020

My point is to justify that I had been receiving the monthly payment of 31300/- with reduced basic of Rs 16000/- for the year 2019 till my leaving.  my ex employer may have my receiving copy sowing reduced basic as Rs 16000/-. Since I received the basic of Rs 28000/- during the  year 2018, is it legal to decrease it all of a sudden to a high margin of Rs 16000/-. without any clear intimation in writing. If so, Section 9A of ID Act 1947 clearly specify to give notice of 21 days for affecting any changes in the employment conditions.  I have not received any intimation from company in writing.  As such no notice has been received by me, I presume that the increment letter showing basic of 16000 no longer valid (eventhough the same has been produced by my ex employer) and I have the every right to get the gratuity on the basic of Rs 28000/- and not on basic 16000/-. 

During the year 208-19 Tax has also been deducted by my ex employer and submitted to the department by way of Form -16, etc. I do have the records with me  . How can this can be justified if any legal consequence occur.

Pradipta Nath (Advocate)     11 December 2020

Provided you can show that your basic + DA beforehand was Rs 28,000/- only then!! Apart does in the IT receipt which has been filed by your ex-employer, your basic is mentioned?

P. Venu (Advocate)     13 December 2020

The posting suggest that you have made (or trying to make) a simple issue a complex one.

Firstly, even assuming that you have received excess payment, you have been not at fault in receiving over-payment. Law does not encourage recovery of small or paltry amounts from employees who are longer in service.

Secondly, the alleged over payment was because of the uninformed and unilateral reduction of basic pay due to restructuring of emoluments at the employer's discretion or, or rather,  whims and fancy. The payment is rector in accordance with the your information and knowledge.

As such,  all that is required is to inform the ex-employer that there has been no over-payment and nothing to refunded.

However, you have rendered the issue complex by venturing investigation as to how the alleged over-payment has occurred and means to regularize your basic pay based on hearsay. You are trying to be too officious, I am afraid. 

It the ex-employer regularize the issue or approach a civil court for getting refund. And, as rightly, opined by learned advocate Mr. Ritesh Maity, the latter course of action would be a non-starter.


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