To whom do we pay the gratuity? We pay the gratuity to the eligible employee. In addition to the eligibility, there is proper formula to calculate the gratuity. Now the question arises is whether for the short payment, did the ex-employee approach you and if yes, then did you prove correctness of your calculation?
I doubt whether employee has approached the labour official directly without approaching you. If your calculations are correct then there is no and need to hire lawyer as such. You too can go to the labour office and present your case.
Secondly, the "controlling authority" that has given you the notice must have calculated the gratuity. Have they mentioned their amount in the letter? What is the difference? Did you ponder over the difference as to what could be the cause of that difference?
The formula for gratuity is: Last drawn salary (basic salary plus dearness allowance) x (number of completed years of service) x (15/26).
According to this formula, the time period of over six months or more is considered as one year.
I feel that the difference in amount could be arising because of different basic salary and DA was considered or different years of service was considered. You can do the reverse calculations on your own and find out the cause of the difference.
1)Relating to the length of continuous service :
Normally some employers might be under the wrong impression that an employee's continuous service for the purpose of Gratuity counts from the date of regularisation or the date on which he gets enrolled under the EPF Scheme. Hence they may omit the temporary service such as casual labor, trainee, probationer etc. It is not correct in view of the deeming provisions of Section 2 - A of the PGAct, 1972 defining "Continuous Service" for the purpose of Gratuity under the Act.
2)Change in the constitution of the establishment subsequent to the appointment of the employee:
The subsequent change in the constitution of the establishment like sole proprietorship being converted later as partnership or Private limited or a private limited company being turned into a public limited company etc are mere cosmetic change and as such it cannot affect the continuity of the services of the employees who serve all along. Similarly, in the case of transfer of undertakings, the liability to pay gratuity for the services rendered immediately before the transfer gets shifted to the buyer if no mention about it in the transfer deed.
3) Periods of unauthorized absence :
Any period of unauthorized absence should be treated as break in service as per the Standing Orders or the Service Regulations applicable. If not such periods should be taken into account for the purpose of continuous service. Similarly, the period of suspension, if any undergone pending enquiry should be taken into account for computing continuous service if it was not treated as punishment in the disciplinary proceedings.
4)Wages last drawn :
Last drawn wages or salary means not exactly what received at last but the at which the last salary is payable. When the last drawn salary comprises of different components, only those of basic and dearness allowance have to be taken for the purpose of calculation of Gratuity under the Act :If it is consolidated, the entire amount should be taken into account. It also implies that matters of non payment at the statutory minimum rates of Wages or revised rates consequent on revision of Wages with retrospective effect may lead to disputes later.
5)Withholding of Gratuity :
The gratuity amount payable under the PGAct, 1972 cannot be withheld or adjusted under any circumstances other than those mentioned in section 4(6) of the Act.
Therefore, any employer facing such a dispute under the Payment of Gratuity Act, 1972 should cross check the Payment, if any already paid and ensure such lapses have not occurred either by over sight or by misinterpretation.
Employers need to keep this expenditure in mind while doing total financial planning for their enterprise.
Trying to cut few thousands on gratuity will only result in legal proceedings, bad image and heartburn.
If employee is entitled pay him w/o finding remote excuses to deny rightful payments.
Employer should go to LIC or other Insurance company and subscribe to a group gratuity fund and leave it to insurance provider to make payments from time to time.
Run your business in savvy manner but not at the cost of penny pinching employee welfare payments.
FORM A-Notice of Opening
FORM B--Notice of Change of Establishment
You have to find out Jurisdictional Controlling Authority-Assistant Labour Commissioner in relation to your establishment.There is no controlling Authority for entire karnataka.You have to find out respective ALC under whose jurisdiction your establishment comes