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Gratuity more favourable than statutory rights

Can an employee legally claim gratuity more than the statutory admissibility as per the Payment of Gratuity Act, citing the company’s policy which allows the calculation of gratuity @ 20 days for each completed year of service to the eligible employees? Can Management not take the plea that it is at the discretion of the Management to pay higher gratuity?

Please suggest reply with any case law.

Thanks and regards

From India, Delhi


Any thing over and above ( instead of 15 days @ 20 days) statutory limit is at the discretion of the Employer.

Even Gratuity can be paid more than 20 lakhs . While the maximum limit for gratuity is 20 lakhs as per the current rules, an employer can choose to pay a higher amount as gratuity if they wish to do so. However, the excess amount will not be tax-exempt.

Employee cannot claim for anything over and above statutory limit by making an appeal before the controlling Authority as per Act as Employer haven't denied the statutory Gratuity.

However if the excess Gratuity is committed by the Employer as per the terms and conditions of the employment contract in writing then employee can seek for justice through a civil court towards breach of contract terms.

From India, Madras

Is Civil Court has any jurisdiction in the Gratuity matter as mentioned in the last para?
From India, Delhi

When your company policy says gratuity is admissible @20 days for each completed year, why do you want to deviate from the policy?

Please refer to his Offer of Appointment; If it is mentioned that Gratuity payment, as per statutory norms, then you can disburse gratuity payment, based on statutory norms, that is @ 15 days for each completed year, subject to his completion of 5 years or more "continuous service"

From India, Aizawl

If there exists a settlement between the employer and the workers that gratuity will be calculated on the basis of 20 days for every completed year of service it will be legally enforceable. There are a lot of such settlements. In the organisation I was working, there is a similar arrangement wherein for the service beyond 20 years, the gratuity will be calculated on the basis of 30 days for every year exceeding 20 years. If you want to change a clause, certainly, you should have a settlement with the workers.
From India, Kannur

Merely because the company has a voluntary scheme of gratuity, it does not mean that it is not mandatory, and you can tinker with it at will. Once you have a well-publicised scheme it becomes a part of the service conditions and it cannot be annulled or modified except following the due process of law. In the case of workmen covered under the ID Act 1947, withdrawal of customary benefits becomes an unfair labour practice. Even in the case of non-workmen, it amounts to a breach of reasonable expectation and there is an actionable claim against it.
So, if you are going to limit to the statutory liability and eschew the extra benefit, follow the procedure

From India, Mumbai
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