Labour Law & Hr Consultant
Industrial Relations And Labour Laws
Harsh Kumar Mehta
Consultant In Labour Laws/hr
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Employee died and had nominated his mother under Payment of Gratuity Act. Unfortunately, mother also died shortly thereafter.
Now father of employee claims to be sole heir. Can employer release payment without verification OR is Succession Certificate required?
1st July 2014 From India, Patiala
If there is any change in the nomination given by the employee in form F, gratuity will become payable to the legal representative authorised by the legal/ succession certificate only. In case of any dispute, you can remit the amount of gratuity to the Labour Officer who is the appropriate authority under the Payment of Gratuity Act.
1st July 2014 From India, Kannur
I joined KPO Company on 3-8-2009, I will relived from company on 3-8-2014 i.e. I need to complete 45 days of notice period. Then I had successfully completed 5 years and 1day of service in single organisation. Now my question is 5 years of service, includes 120 days of Loss of pay (informed and uninformed days), kindly explain whether I am eligible for gratuity or not as per Gratuity Act 1972. Kindly send my legal documents or link.
Note: i have worked for 278 days in forth year i.e. 4-5. whether i can submit FORM F
I need clarification on which basic gratuity is calculated in our company. As per 1972 gratuity act
1. On the completion of 5 years of service (with out loss of pay i.e. informed and uninformed in the service)
2. On the completion of 5 years of service (with loss of pay i.e. informed and uninformed in the service)
3. On the completion of 5 years of service including notice period (with or without loss of pay i.e. informed and uninformed in the service)[/QUOTE]
1st July 2014 From India, Bangalore
If you have worked for 240 days in each year you are said to have worked for 5 continuous years and are eligible for gratuity. In case during a year you have not worked for 240 days and the loss of pay remained unauthorised then you will not get eligible for gratuity. This 240 days working includes all paid leave days, weekly off days and holidays.
There is no separate treatment with regard to notice period, loss of pay etc. If eligible for gratuity you will get it and what makes you eligible to gratuity is what I have stated above, ie, continuous service (without loss of pay/ paid days of 240 days in a year) of five years
2nd July 2014 From India, Kannur
Almost all employers would treat the "unauthorised leave" (loss of pay, unauthorised leave = absent) as a break-in-service. We have no clue from you as to how your LOP days were treated in your service conditions. If they condoned this period and ratified later on as 'part of LOP leave' then you might have a chance to have it reckoned as 'continuous service' . And also you mentioned as 'informed' and 'uninformed' leave which requires clarity. Moreover if it were to be a continuous LOP of 102 days in a single calendar/service year there is no chance of clocking stipulated 240 days of working days (including holidays) in every year and for 5 years to be eligible for gratuity. Better get these sorted out at your office.
2nd July 2014 From India, Bangalore
Dear Seniors
Greetings of the day !!!!
If a retired person , engaged again in a contractual service for consecutive five years . Can he eligible for Gratuity .
His age is nearly 66 years . During his actual retirement he got his due gratuity at the age of 60 years .
Now can he claim it again after completion of 5 years in a contractual service.
3rd July 2014 From India, Bangalore
Certainly YES. Under Payment of Gratuity Act there is no age specified and nor there any bar on employment after superannuation or employment after collecting gratuity. Therefore, if the extended service after superannuation and collecting gratuity till date of superannuation or new service after retirement, exceeds 5 years, naturally, he is eligible to get gratuity again for that extended period or new service after retirement, as the case may be.
For being eligible to gratuity, it is not necessary that one should be in regular rolls of the company but it is available to those who are employed on fixed term contract.
Please find the two attachments which support the above.
3rd July 2014 From India, Kannur

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File Type: docx Gratuity to FTC.docx (17.7 KB, 270 views)

This is in continuation of what M/S Madhu and Kumar stated regarding computation of 240 days for the purpose of entitlement to gratuity.For the sake of clarity and ready reference, let me give an extract of "the Statement of Objects and Reasons"of the the P.G ( Second Amendment ) Act,1984 as hereunder:

"2.The Supreme Court had in its judgment in the case of Lalappa Lingappa v. Lakshmi Vishnu Textile Mills, Sholapur [ 1981(1) LLJ.308 ] held that in terms of the existing definition of "continuous service" in sec.2(c) of the Act, the permanent employees were not entitled to payment of gratuity for the years they remained absent without leave and had actually worked for less than 240 days in a year. It has been represented that the enforcement of this ruling resulted in denial of gratuity to a number of employees, whose short term absence had remained unregularised due to lack of appreciation of its significance for the purpose of working out their entitlement to gratuity. It is, therefore, now proposed to amend the definition of "continuous service" suitably and to specifically provide that a period of absence in respect of which no punishment or penalty has been imposed would not operate to interrupt the continuity of service for the purpose of payment of gratuity."

In the light of the above reasons, if we analyse Section 2-A of the Act, it would be easily discernible that

ss(1) of sec.2 creates a legal fiction for arriving at the number of days constituting continuous service in any given stretch of period of service of an employee under the same establishment inclusive of interruptions that could be treated as non-interruptions.They are:(1)interruption on account of sickness (2) interruption on a/c of accident (3) interruption on a/c of leave (4) interruption on a/c of absence from duty without leave ( not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment,(5) lay-off (6) strike (7) lock-out and (8) cessation of work not due to any fault of the employee.

ss(2) specifies the no. of days in different strecth of periods in cl (a) and (b) to be deemed as continuous service as per ss(1).

The Explanatory Clause speaks about further interruptions due to other reasons.

Therefore, the Leave on Loss of Pay, whrther informed or uninformed, in the absence of any order or service rule treating the same as break in service, would count for computing continuous service for the purpose of gratuity.
3rd July 2014 From India, Salem
Thanks Mr.Umakanthan for the detailed clarification on the issue. I forgot to mention, that any interruption constituting a break in service (resulting in set the clock backwards) in anybody's "continuous service" should be as a result of a 'speaking order' passed by the competent authority to that effect, mentioning the reasons therefor and the process with which the such order emanated. This has been the rule and practice followed in many big organisations where detailed HR policy, rules and regulations are in vogue. At the same time this rule is very rarely used for the simple reason such 'breaks' revert the long serving employees back to 'fresher' nullifying the service rendered by them. Such breaks often seen in 'habitual absentees' who are generally known as heavy drinkers, mentally upset, chronically ill, highly indebted, a spent thrift & so on. Many employers condone such short breaks with LOP provided they are otherwise competent and hard working and well behaved in work places taking a lenient view. We have seen many such persons specially in PSUs.
4th July 2014 From India, Bangalore
I joined a Company on 3-8-2009, I will relived from company on 3-8-2014 i.e. I need to complete 45 days of notice period. Then I will successfully completed 5 years and 1day of service in single organization. Now my question is 5 years of service, includes 105 days of Loss of pay (informed and uninformed days), kindly explain whether I am eligible for gratuity or not as per Gratuity Act 1972. Kindly send my legal documents or link.
Attendance is as follows i.e. 1st year I have worked for 331 days, in 2nd year I have worked for 343 days, in 3rd year I have worked for 332 days, in 4th year I have worked for 355 days and in 5th year I have worked for 350 days. In that 32 LOP in 1st year, 21 in 2nd year, 36 in 3rd year, 10 in 4th year and 6 in 5th year, total 105 loss of pay in 5 years of service
PFAC of my attendance, i kindly reply whether i am eligible for gratuity or not?
27th July 2014 From India, Bangalore

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An average of 30 loss of pay will not make any difference. Moreover, since you have been on regular rolls and not on casual or daily wages, you will be eligible to gratuity. Madhu.T.K
29th July 2014 From India, Kannur
Dear Mpratish,

What treatment the LOP days should be given depends on HR/Leave policy of a firm. It's also depends on, in many firms, on the goodwill, a go-getter, enjoyed by the employees concerned and ultimately the deciding factor is HODs' recommendation on such availment from case to case basis. I personally feel "uninformed leave" does not warrant a kind treatment from the point of view of the employer and deserves to be treated as absent (except on valid reasons like sudden illness, accident etc.) which in turn could be amounted to 'break-in-service". So I request all our employee friends never, ever venture for "uninformed LOP" as there is always a danger of losing benefits accruing to all of your past services. This is so 'leave itself cannot be taken as an automatic right to avail' ofcourse except on emergencies. It goes without saying 'an unwanted person' cannot complain of discrimination if 'a break-in-service' is meted out in case of LOP, of course sometimes no.of days also matters. In these situations it's good for them to sort them out immediately on rejoining duty after the LOP and see it did not result in break-in-service otherwise one has to repent leisurely when they are leaving and face the shock of problem in F & F settlements.
30th July 2014 From India, Bangalore
As per the Act gratuity is calculated at the rate of 15 days pay for every completed year of service. But there is nothing illegal in paying gratuity at higher rate. Normally, if there is a settlement with the workers that gratuity will be paid at higher rate (say, at the rate of 30 days pay for every year of service to those who completes 20 years) then the employer is bound to pay it at such rates. There are many companies which pay gratuity at higher rates. But there should be specific policy and the policy should describe the length of service and the rate at which the gratuity shall be paid. You should also ensure that you will be able to continue with the policy and will be able to make it applicable to everybody who qualifies.
22nd August 2014 From India, Kannur
I know gratuity will calculate as follows i.e. basic + da *15/26days * no of years worked
My question is my last working day was 4-8-2014. Now my basic and da for 4 days is (240+86) is my gratuity will be 940 INR or else it will calculate on last withdrawn salary i.e. 31-7-2014 then my basic and da on last withdrawn salary is (6250+2250), in that case my gratuity will be 24519.
Kindly clarify my doubt.
23rd August 2014 From India, Bangalore
last drawn salary means monthly average and not actually received. If your monthly salary was Rs 8500(6250+2250) then it will be taken into account and not the days worked last month Madhu.T.K
23rd August 2014 From India, Kannur
Hi Madhu
I seek your advise on the matter below-
My employment with a US MNC was a fixed term contract for 3 years on renewable basis. They parked the sum for my gratuity and showed it to me part of CTC. It was never a part of payout.
On attainment of my third, year the organization did not renew my contract and let me go. My question is:
Since my agreement did not get renewed and the gratuity was deducted, can I claim it from my ex-employer.
Thanks and regards
21st October 2014 From India, New Delhi
I don't think that they would have deducted it from your salary but rather they would have shown it as part of CTC. If it is shown as a deduction from your monthly salary, then you can claim it, otherwise not.
Another important thing that the HR should note while drafting the appointment orders and salary structure of an FTC employee is that if the contract is for period not exceeding five years, never show the gratuity as part of CTC because in such contracts it is certain that the employee employer relationship will come to an end before five years and in no way payment of gratuity would arise. And if you still show it as part of CTC, it can be questioned and if the employee files a case, there is every chance that the employee will win it on the ground that the employer has given wrong message about the package.
This has what happened to Maverick also. If you share your complete details we may be able to advise you further on it.
22nd October 2014 From India, Kannur
Hi Madhu
Thanks for your insight. I shared my payslip and you are correct they have not been deducting, but shown it as my CTC. My argument is, neither it was given to me as a monthly pay out, nor it was given to with my F&F, I as an employee is at sheer loss.
Will I be wise/judicious to pursue this with my employer and if necessary take to legal?
You advise will be a great help.
Thanks and regards
27th October 2014 From India, New Delhi
It will not work because it is payable on a condition and that you have not fulfilled that condition, ie, the condition that you will work for a minimum period of 5 years. Now another question may arise, that what will happen if the service is terminated? Again it is a question to be answered with reference to the terms of employment. It is true that showing the gratuity amount as cost to company is not a good practice since it lacks transparency. But the practice is to show it. By doing it we are inviting endless confusions. But the employer's defends will be that if you misinterpret the meaning of CTC as monthly salary, the employer is helpless and on accepting the offer itself you should have studied the offer well and clarified the points where you find ambiguity.

A similar amount which the new generation companies show in the CTC is the loyalty incentives which is payable on serving the company for a certain period. This is a condition of service which will be maintainable also.

27th October 2014 From India, Kannur
An employee was working in the state PSU and after putting 3 years service he was terminated by the management as he had not having the qualification as per the post for which he was recruited and the mistaken arised due to clarification by concern authority.After 6 month by interim order of Hon'ble HC he was reinstated . after 5 years the Hon'ble HC passed its judgement in favour of management and validate the dismissal order. This order came into knowledge of management after 10 years. management again issue the letter for termination from the back date. An appeal made by the employee before Hon'ble SC who upheld the decision of HC and also directed the management for 10 lakh compensation. now whether he is eligible for payment of gratuity when his dismissal order has been found legal by court and at the same time he served more than 20 years in PSU
2nd March 2017 From India, Lucknow
Sir, I think, in the Payment of Gratuity Act, 1972, there is only a condition of continuous service for not less than five years. Whether the employment of said person is legal or not appears to be not an important factor. However, much will depend upon as to what are the orders of Hon'ble Supreme Court. Whether the compensation of Rs.10 lakh may be in lieu of said Gratuity etc. Therefore,I think, the employer will also keep in view the contents of Court Orders before contemplating his claims under above Act.
2nd March 2017 From India, Noida
The episode narrated by Ranjanrajan seems quite unfortunate to both the Management and the affected individual. It is also vindicative of the legal maxim - " Justice tardive, Justice fautive " - i.e., Justice delayed is justice denied. Normally the process of appointment is a follow-up one confirming a candidate's selection after verifying all his credentials. But in the given case the officer took so much time even to seek clarification and came to the belated decison that he was not qualified and hence the termination that formed the cause of action for the entire litigation dragged for years subsequently culminating in the question of his entitlement to gratuity for the years he served. Unless the entire text of the final judgment is available, it will not be possible to give an appropriate answer to the question, as rightly observed by Mr.Harsh Kumar.

However, an answer ventured out of the philosophy behind the aspect of payment of gratuity to an employee is also possible in the special back-drop of the case. An unqualified candidate was wrongfully appointed to a post the fact of which was realised belatedly only by the Management and hence his services were terminated after three years. Of course the same was stayed by the Court immediately on the employee's appeal while the main issue was still pending.So the relief of continuation of his service was only of interim nature till the disposal of the main issue which came to the knowledge of the Management further belatedly for obvious reasons though it was favourable to them. When on further appeal by the employee, the orders of the High Court was confirmed but with a definite relief of a fixed sum of compensation to the employee. I think that there ends the matter.

My personal view, therefore, is as follows:

A)Gratuity is essentially based on two aspects - one is blemishless service and the other is a certain minimum length of service. When the very appointment itself is wrong due to lack of essential qualification, the subsequent termination of services based on such wrongful appointment would also be a declaration to the effect that the person was never appointed as such apart from extinguishing the wrong appointment as void ab initio.

B) The compensation fixed on the final orders on appeal puts an end to all claims of terminal benefits,if any.

The views other friends are solicited.
3rd March 2017 From India, Salem
While appreciating the posts of Harsh and Umakanth, I would also like to take it in another angle, that, is it due to any mistake or concealment of facts on the part of the employee that he was allowed to work for such a long period or don't we find that there was negligence from the management side that the management failed to get the order of the court in time. Is it due to this negligence that the employee continued? If so, don't we say that gratuity is payable for the service that he had rendered?
3rd March 2017 From India, Kannur
1. Madhu T.K.Sir, thanks for appreciating my posts and views as above. Your appreciations continue to encourage me to participate in discussions in this citehr.
2. However, I may submit that as observed from various detailed judgments of Hon'ble Supreme Court/High Courts, Hon'ble courts in administrative matters like as we are discussing closes the entire dispute for future by awarding a lump-sum compensation to the aggrieved employee. Such lump-sum compensation may include all claims viz. notice pay, gratuity, leave encashment etc. etc. in respect of which the agreed employee must have made his claims in the petition. I think, the observations of Mr. Umakanthan M. appears to be important and relevant in the situation. With regards.
3rd March 2017 From India, Noida
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