Gratuity Dilemma: Can Verbal Agreements Hold Up When an Employee Rejoins?

Dear Seniors,

Please provide your suggestions in the following situation:

Our employee joined the company in 2004, but in 2007, he resigned and joined another company. After 15 days, he returned and rejoined us. At that time, we verbally assured him about the continuation of his services. Consequently, we did not issue a relieving letter, experience letter, or settle his dues in full. We should have requested a resignation withdrawal letter from him, but due to oversight, we failed to obtain it.

Now, in 2010, the employee has submitted his resignation and is claiming gratuity based on the verbal approval for the continuation of his services. According to the finance head, he is not entitled to gratuity as he worked for 15 days in another company. We are attempting to persuade our accounts team that verbal approval was granted for service continuation, but they are insisting on the resignation withdrawal letter which we did not collect when the employee rejoined our organization.

Kindly advise on whether this employee is eligible for gratuity based on the verbal approval for the continuation of services. Also, please suggest what actions the company can take if we choose not to pay the gratuity, and whether the employee could pursue legal action against the company.

Regards,
Aadhya

Verbal approval does not form the basis for continuity in service. It is better to convince Finance and honor your verbal commitment. You can take post-facto withdrawal of resignation from the employee if you intend to pay the gratuity without a break in service.

What about his PF account number? Is it the same as before? What is his employee ID? If you have enough evidence, then you can convince him that it was a case of rehire.

Mayuri

Dear Seniors,

Please provide your suggestions in the following situation:

Our employee joined the company in 2004 but resigned in 2007 to work elsewhere. After 15 days, he returned and resumed his position with us. Although we verbally assured him of continued employment, we did not issue a relieving letter, experience letter, or settle his dues. We should have obtained a resignation withdrawal letter, but oversight led to its omission.

This employee submitted another resignation in 2010 and is now seeking gratuity based on our verbal assurance of continued service. The finance department contests his eligibility, citing his brief stint at another company. We are attempting to persuade our accounts team by referencing the verbal commitment, but they are insistent on the missing resignation withdrawal letter from his rejoining period.

Could you advise if the employee qualifies for gratuity based on verbal assurance? Additionally, if we deny payment, could he take legal action against the company?

Regards,
Aadhya

Dear Aadhya,

If the employee ID and PF account number are the same, he is entitled to gratuity; otherwise, not.

Regards,
Rahul Chhabra

Dear Aadhya,

There are a few things to get clarified:

1) Did your company accept his resignation? If yes, have you issued any relieving letter? If yes, has any new appointment letter been issued for rehire with a new PF account number, employee number, etc.? Moreover, if no, there is no point in a break in the service.

2) He left the organization for only 15 days and rejoined the company. If everything is verbal, there is no need to consider him as a new hire.

3) Have you processed any full and final settlement?

4) Try to convince your accounts person that he has not been relieved and went on leave for 15 days, and adjust the same with earned leave.

5) Apart from everything, he has worked more than 245 days in that year; hence, you cannot show him as having a break in services. Therefore, he is entitled to gratuity.

Dear Seniors,

We have continued with the same PF Account Number and employee ID as well.

Regards,
Aadhya

If you have continued with the same PE and employee ID, then his absence shall be considered as PL. Since everything was oral, he can easily prove that it was his leaves.