No gratuity policy in our company - employee demanding gratuity upon resignation - CiteHR
Saswatabanerjee
Partner - Risk Management
Nathrao
Insolvency N Gst Professional
Korgaonkar K A
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BMKANAY
Hr Generalist, Wellness Programs
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One of our employee has completed 6 years with our company and has resigned and relieved by the company. There is no gratuity policy in our company but after getting relieving letter the employee is asking for gratuity. Can anyone suggest what should we do in such a matter as I don't have much knowledge of gratuity. Please help me out with suitable answer.
Whether you have taken Gratuity Policy or not, is not the criteria for Gratuity.
Gratuity is payable when
(1) The Act is applicable to you; and
(2) The employee who left you has completed 5 years and more.
In absence of Gratuity Policy, you have to absorb your liability to pay Gratuity from your company account.

Thank you, could you brief me more about Gratuity?
Kindly read the Payment of Gratuity Act 1972 and rules first.
Then you will get some basic idea.
Further queries will arise and then experts here will try to assist.
How many employees do you have?

Gratuity is Eligible for the employees after completing 5 yrs and it will be taken into account of last drawn Salary basic + DA*No of years *15/26
Regards,
Sathya
NI Consulting Services Private Limited
81, Peters road,
Royapettah
Chennai-600014
9841874747
9884691063

One more point...
If the company has less than 10 employees, gratuity does not apply

An employee will be covered under the Act if the organisation employ at least 10 persons on a single day in a preceding 12 months. And once an organisation comes under the purview of the gratuity Act, then it will always remain covered even if the number of employees fall below 10.
Thank you to all for suitable answer
Dear Vasu,
In a simple manner one can not digest the point that your company is not covered under or gratuity is not applicable to workmen.
In two cases gratuity would not be applicable either
(i) the establishment does not have minimum number of workmen
(ii) or exempted by the appropriate Government (chance is remote).
You check whether your establishment is coming under above two categories. If not, then the workman is squarely eligible for gratuity. Non-compliance by your establishment may face legal complicacy.

Hi Mr. Mohanty,
My company is 20+ years old and there are 100+ employees working with us.
T&R
Vasu


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