Madhu.T.K
Industrial Relations And Labour Laws
Glidor
Hr Consultant
Drbijoy
Med. Superintendent
+1 Other

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Hi Seniors, Need your guidance for gratuity. We are a small recruitment company just reached the figure of 10 employees this month and company got incorporated in 2014. So, my first employee has started from May 2014 and she has completed her five years with the organization.
I am applying for the Gratuity benefit for all the employees so it would be done in this month.
queries are stated below.
1) My first employee who is with me for past five years if she leaves the company say in the coming month would she be eligible for the gratuity for last five years (which I wish to pay her) even though I will start the gratuity plan from this month.
I have raised the same query with LIC (Gratuity) and they told me that she would be eligible but as per the other seniors she wont be eligible as company has started the gratuity recently. Please guide as we want to be very fair with the employees in case of their benefits.

Gratuity fund will assess and collect the requisite fund from the employer, if the old employees does not come in ambit, the fund will handle the same, if they get eligible from starting date, the fund will collect the fund from employer and pay them
It is true that your establishment is covered now only but the employees who have joined earlier to the coverage will get the benefit of the Act with effect from their date of joining. Therefore, your employee who completes 5 years from the dates of their joining should be paid gratuity.
As far as LIC is concerned, they have no say in whether an employee should be paid gratuity or not. They can refuse payment saying that you have not paid premia in respect of them. In such situation it is your take to pay it from your working funds. After all,LIC fund is only to make sure that you pay it without depleting/ affecting the working capital.

Thank you so much Seniors. Really appreciate your quick response and it once again thanks for your guidance and support.
Dear Ranjeeta,
The Payment of Gratuity Act, 1972 (the Gratuity Act) is applicable to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments with ten or more employees.
As per your post, the srtrength of employee has touched 10 by virtue of the strength your establishment comes under canopy of Gratuity Act.
All the employee of the establishment irrespective of their date of joining comes under the coverage of act. Then the establishment has to pay the amount of gratuity to the employee who is/are leaving service and has completed five years of conteneous service. LIC suo moto does not pay any sum to anybody if not policy or premium paid on policy.

Mr. Madhu is absolutely correct. As soon as the employee completes 5 years of continuous service from the date of joining she becomes eligible for gratuity when she retires/resigns. The gratuity will be paid by the company or a gratuity fund like LIC, if covered.
When a gratuity fund is started in LIC, the gratuity premium backlog for all employees is calculated up to date and deposited with the LIC fund. In such case, the gratuity for all employees will be paid by LIC.

I have read your post. It solved some aspects of the problem. I think you need to make the problem clearer
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