Industrial Relations And Labour Laws
Assistant Human Resource Manager
Human Resource & Indistrial Relation
+2 Others

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Dear All,
Please help me regarding the eligibility of the employee who have completed approx 4.7 months in the organization and the copany now is asking them to leave because of the transformation happening in the organization.
The employee has been asking for the compensation against the gratuaity payment on the ground that they want to serve the rest of the tenure.
Please suggest in case there is any statutory obligation on the part of the co. to pay them the gratutity amount.
Thanks and Regards,

Statutory obligation of employer to pay gratuity comes only when an employee leaves after serving at least for 5 years. But there exists a court ruling allowing gratuity to those who have completed 4 years and 240 days in the fifth year.
In your case, the employee is not leaving at his own will but you are terminating his service although officially you will collect resignation letter. If suppose, he does not resign then you should proceed with termination. If an employee is terminated, naturally, he should be paid termination compensation which will again be equal to 15 days pay for every completed year of service (similar to gratuity). Therefore, it is advisable to pay him gratuity. Again, as pointed out by me, as there exists a ruling of court to pay gratuity even if an employee is not eligible as per the Payment of Gratuity Act, it is better to treat his leaving very cordial.

Dear Kritika,
If you have any new suggestion to what I have posted in reply to Nesh's question you post it. If you are marketing the new website do it in separate forum with a new post. I have also visited the so called site, but I didn't find any thing new from citehr. Yes, I found some postings which were earlier made in citehr. I have also noticed a PPt on ESI many provisions of which are old without reference to the recent amendments.
While making comments ensure that there are so many members in citehr who are highly experienced in Personnel Management/ HR who will hurt.

As per the gratuity act ,an employees is eligible for gratuity only on completion of 5 yrs,but if u see definition of continuous service as per section 2A (sub sect 2b),an employee deemed to be in continuous servive if is put in the service for 120 days.
In view of the above an emoplyee worked for 120 days during 7 months ,then he will become eligible for Gratuity.
For cmoputing gratuity amount u have to consider fifteen days average pay for all completed year of contiuous service as per sect.4(2) ,as any excess of six months service would be considered for computation.
P George

Dear Mahu,Plz explain this termination compensation, as i heard this term first time. please explain in detail. from where it is derived etc.RegardsRanjeet
Dear Ranjit,
Termination compensation means retrenchment compensation payable as per provisions of Industrial Disputes Act. Under the ID Act, if any employee who has been in continuous service of at least one year is retrenched, he shall be given compensation which shall be equal to 15 days average pay for every completed year of service.
Dear Mr. George,
Your interpretation of continuous service as per section 2A is correct. However, the reference to continuous service here will be made inorder to determine whether an employee who has actually been on roll for more than 5 years and ensure whether his service was otherwise interrupted.

Dear Madhu,Thanks, But for evry completed year means that we have to pay up to the time that he will age of superannuation.If a person is terminated in reasons of misconduct, than we have to pay termination compensation or not.Plz reply.RegardsRanjeet
Completed year of service will be taken upto the date of leaving for whatever reason, viz, resignation, superannuation, disability or termination. In case of death of employee, the qualifying phrase of 5 years of continuous service is not applicable for payment of gratuity to the dependents.
If an employee is terminated for misconduct, he is to be paid gratuity provided the misconduct is not of severe nature and the enquiry officer who conducted the domestic enquiry has awarded ' discharge' and not ' dismissal'. In case of dismissal, however, no gratuity is paid and dismissal is made only when the misconduct is of very severe nature.

Dear Madhu,Thanks.For Example:-If a persom had joined on 01/02/2000 and terminated on 31st january, 2008, than we have to take retrencment compensation for 8 years only.I am Right or Not? Plz explian the term Discharge and Disissal in details by giving examole.RegardsRanjeet
An employee joined on 1-2-2000 and leaving on 31-1-08 has 8 years of service. If terminated, he should be given retrenchment compensation for 8 years @ 15 days salary for every completed year of service. This will be in addition to the gratuity payable to him and gratuity amount will also be calculated @ 15 days for 8 years.

Termination of service for gross negligence and misconduct may be dismissal from service. An employee will be dismissed only when the misconduct is of very severe nature for which maximum punishment is to be awarded, say for example, misbehaving/ physical harassment of employees of opposite sex, manhandling others in the office, causing damage to property due to gross negligence etc, whereas, only discharge is awarded for absence from duty, sleeping while on duty, misappropriation of cash (depending upon the amount involved dismissal can also be awarded) etc. In case of discharge, unpaid salary, leave encashment, gratuity etc will be given whereas, nothing is paid if he is dismissed.



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