The definition of indemnity is protection against future loss or legal exemption from liability for damages. In your case, you are paying the employee benefits to the nominee of the deceased employee. Then where is the question of indemnification? By paying the terminal benefits, what future loss do you foresee?
All these transactions happen through cheque or NEFT. Therefore, all that is required is to take "No Due Certificate" from the nominee. In fact, when the Full and Final (FnF) settlement is made, a detailed account is provided of the eligible dues and at the end, a signature of the employee is taken for having understood the break up and no dues are outstanding. You may do that but in this case from the legitimate nominees of the deceased employee.
2nd July 2018 From India, Bangalore
Some time there is a dispute as to legal heirs of deceased employee. No nomination form is available with employer. Therefore just to safeguard the self interest and to have some binding effect, the employer do ask for some sort of undertaking or indemnity from the legal heirs of deceased employee.
Now the question of drafting the document is concerned, the member is advised to get it done through a professional giving him all facts rather than getting ready-made or blank draft through various sources.
3rd July 2018 From India, Mumbai
My objection or concern is limited to the inclusion of the phrase "indemnity". Is this a appropriate phrase that can be used while obtaining undertaking from the nominee of the deceased employee? I am not against obtaining undertaking or declaration from the nominee per se. Nevertheless, after disbursement of the FFS, where is the question of indemnity that I did not understand.
Let me give you example of indemnity bond. Suppose company provides free transportation facility to the employees. However, before availing of this facility most of the companies obtain indemnity bond from the employee so as to protect itself from the claims arising out of accidents.
The meaning of the word indemnity in Hindi is हानि से सुरक्षा and Marathi it is नुकसानभरपाई. Translation in both the languages is self-explanatory.
Earlier, I had given draft of the Letter of Indemnity. You may click the following link to refer it:
3rd July 2018 From India, Bangalore