parag_kawale Started The Discussion:
If any employee dies just after 2 months of joining then can his/her legal heirs claim gratuity? If yes, then how to calculate gratuity just for 2 months? or What will the legal heirs get as per the Payment of Gratuity Act?
I just want to know what amount of gratuity will the legal heirs get if any employee dies just 2 months after his/her date of joining?
Gratuity is to be paid to an employee who dies before completing the qualifying service of five years. But the Act is silent with respect to any minimum service in the case of death. For the purpose of calculation of amount of gratuity a service period extending six months shall mean one year whereas service of less than six months shall be ignored. Therefore, if the deceased had worked at least for six months and a day, his dependents would have got gratuity calculated at the rate of 15 days wages/ salary. However, being a death case, even if the service of one day is considered, the gratuity will not be more than what one should get for one year, ie, 15 days salary.
The Payment of Gratuity Act has made it obligatory on the part of employer to get nominations from all employees who have completed one year of service. The purpose behind this provision is that if any employee dies, his dependents/ nominees should get gratuity without undergoing hassles. If the employer is to give gratuity to dependents of a deceased employee who worked for less than one year or two months, as in the instant case, there could have a provision that nomination should be collected from an employee as and when he joins the establishment, like ESI or EPF. In the absence of it and since there is a provision that nomination is to be collected from employees who have completed one year of service, the question of payment of gratuity to dependents of employee who died before one year of service is doubtful.
Open for discussion.
Mr.Madhu has raised an important question.
We are supposed to collect the nomination in Form F after the one year of Service.
For calculation part we can take one in the place of no of years serviced. But the question raised here is whether it is legally binding one or not.
Any Precedent case in this regard?
As far as my knowledge goes there are no precedents for the method to be adopted by the employer in case the worker dies with less than six months of service.
Regarding the disbursement/payment of gratuity after the death of the employee I invite your kind attention to the second proviso to Section 4 of the Payment of Gratuity Act. According to this proviso in the case of death of the employee gratuity which is due could be paid to his nominee if the nomination had been obtained in the prescribed form and following the provisions of section 6 of the Payment of Gratuity Act. In case there is no nomination, according to the second proviso to section 4 the gratuity can be paid to his legal heir(s).But the employer may find difficult to identify the legal heir. In case a payment is made to a person believing him to be the legal heir, and subsequently if some other person also claims that he/she is a legal heir the employer had to establish that the person to whom the amount was disbursed is the only legal heir. Moreover, the legal heirship of an employee can be determined only with reference to the personal(religious) laws of the deceased employee. Legal heir ship is a complicated question of law and fact which the employer is not competent to decide. This could be decided only by Courts. To avoid any penal interest for not disbursing the gratuity amount within the legally stipulated time, the employer could safely deposit the amount accepted by him as the gratuity payable to the deceased employee with the Controlling Authority under the Payment of Gratuity Act. The receipt given by the Controlling Authority would be regarded as sufficient discharge of the liability of the employer within the stipulated time. Then it is the duty of the Controlling Authority to identify the correct legal heir and disburse the amount to him. I invite your attention to Section 7(4)(a) of the Payment of Gratuity Act. Of course the legal heir(s) may claim that they are entitled to get more than what had been deposited by the employer. In such a situation the case has to be contested on facutal evidence.
Gratuity is applicable when 5 years complete
but in case of employee death gratuity is payble upto retirement. Gratuity calculation is mention below.
Suppose Employee Age is 26 at the time of joining and basic salary is 8000/-
= 58 - employee age
= 58-26 = 32
gratuity = basic salary x lenth of service x 15/26
= 8000 x 32 x 15/26 = 147692.00
Gratuity is Payable of Rs. 147692.00
Very consisely put. However, we still need to address how to calculate Gratuity for two months, which is part of the initial query.
Gratuity is calculated as under:
Wages/26*15= Gratuity for one year.
Divide the amount by 12 and multiply the same by two, and you get two month's Gratuity
Dear Sonu Kumar,
I am not able to follow your calculation of gratuity in case of death. You have stated that in case of death gratuity is calculated with reference to age and length of service remaining till date of superannuation. Under which Act or under which section of the Payment of Gratuity Act, is it mentioned that the dependents of a deceased employee is to be paid gratuity on the basis of period remaining? I have not gone through it. Please clarify.
We have pooled all our experience but primary question is unanswered “Is it mandatory for employer to disburse gratuity to employee dies with two months of employment”
The question is how much employer is concerned with values and moral responsibility to yoke or support to affected family extreme cases would have larger infact to employees associated.
The answer as per legal provisions available is available in my immediate reply to the first post itself. But the discussions progressed on my apprehensions about the legal responsibility only. Morally, an employer can pay any amount as gratuity and in the present case of death after two months of service also, the same thing is relevant. I have also mentioned that the maximum legal obligation can not be more than 15 days wages which is same for an employee who served for one complete year or rather one year and six months.
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