One of our employee has worked with us for 7yrs, after 8months we received letter for Gratuity payment.
My Management is ready to pay his each & every due but as co, is sailing in bad financial crises which ex-employee does not want to listen.
Please suggest what action he can take against us or what preventive action we should take to avoid this.
From India, Thana




From India, Pune
From India, Thana
For any dues to an employee, it can be put on hold (statutory benefits) to an maximum of 180 days. If your company is active to date, you have to pay them without any delay. Only option is that you can convince the employee by given a time frame to settle his/her dues.
From India, Madras
From India, Thiruvananthapuram
No one cares that you gave extra in the good times.
Employees consider that as their dues.
So no use talking of that.
You have 3 options :
- Ignore the letter and wait till the matter is put before the gratuity authority
- Reply and accept your liability but ask him for some time due to bad financial position
- Deny the liability if you have some reason or grounds (eg service break, less than 10 employees, etc)
If you accept the liability, then you need to arrange for the amount, probably by taking a bank loan and paying it off in EMIs
From India, Mumbai
Your case is very weak as regards the payment of gratuity to the individual, who has completed 7 years of service with your company.I am surprised that even after a lapse of 8 months, you have not paid him and you expect your ex-employee to wait for more time on the plea of bad financial position of the company.My advice to you is that you should immediately pay him without further delay otherwise you will land yourself into problem.Your ex-employee is within his right to claim interest on the delay payment of gratuity.For your better understanding, I am mentioning below the law position:-
As per Section 7(3) of the Payment of Gratuity Act, an employer is required pay the amount of gratuity, within thirty days from the date it becomes due to the person
Section 7(3A) further stipulates that if the amount of gratuity is not paid by the employer within thirty days, the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government.
Section 8 of the Act provides that if the amount of gratuity payable under this Act is not paid by the employer, 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 the rate of nine per cent per annum, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto.
Section 9 of the Act stipulates the non-payment of gratuity payable under the Act is punishable with imprisonment up to 2 years (minimum 6 months) and/or fine up to RS 20,000/-.
I hope the consequences for the non-payments are cleared to you now and you will proceed to pay the individual without further delay.
BS Kalsi
Member since Aug 2011
From India, Mumbai
From India, Delhi
Greetings for the day,
Gratuity is the reward from employer to an employee for rendering his/her 5 year service to the organisation. It is an statutory liability which is necessary to pay. Thirdly calculation can be done on basic salary not on gross.
Thanks & Regards,
Sumit
From India, Ghaziabad