Absconded Employee's Gratuity: Should We Claim Now or Wait for His Request?

Dear Seniors,

Greetings of the day.

If a person is absconding for 2-3 years and we have closed his file just now after sending a termination notice to him, I want to know, should we claim his gratuity from LIC now or should we wait until he asks for gratuity? Actually, we do not know his whereabouts. And if we do not ask for it now, can we claim it later on?

Anticipating an early response.

Thank you and regards,

Jyoti Negi

Dear Jyoti,

Gratuity is the monetary benefit that is given to an employee on his retirement, resignation after rendering continuous service for 5 years, or due to death (In case of death, the 5-year condition doesn't arise). If the employee has been absconding for the past 2-3 years and you have terminated him, then your company need not pay any gratuity to him!

Now, does your company have its own fund? Under the Act, if your company has more than 500 employees, then you can maintain your own fund, duly following the rules mentioned in the Act (regarding contribution from the employer, trustees, safe custody of money, depositing as per rules, etc.). If you have your own fund, then why should you claim your own money? The money, in that case, will be adjusted and paid to the person (next) claiming for gratuity. So, you need not claim anything!

If you still have doubts, please write back.

Regards,
Santosh
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Dear Santosh,

Thank you for your prompt and valuable response. I would like to clarify that the person who was absconding had already served for more than 5 years and was entitled to gratuity. Currently, he may be out of India and may request gratuity upon his return.

Additionally, we do not maintain our own gratuity trust. We have a policy from LIC and forward the person's details upon his resignation/termination if entitled to gratuity. Even though it is our own money, LIC maintains it. Therefore, I would like to know if we can request it at any time since we are unsure when the person will request it.

I hope I have clarified my doubt to you.

Regards,
Jyoti Negi

Dear Santosh,

You have quoted, "If the employee has been absconding for the past 2-3 years and you have terminated him, then your company need not pay any gratuity to him!"

But is this in line with the Gratuity Act? To my knowledge, if the particular staff member has completed 5 years of service, then he should receive his dues regardless of whether he is terminated or has absconded. I am not fully aware of the act; please guide.

Pranesh
pranesh007@gmail.com