Is Our Company Liable for Gratuity Payment After Employee's Death? Seeking Guidance

Dear Seniors,

Today my query is regarding the payment of gratuity. One employee in our organization was initially appointed through a third-party contract for 3 years. After the completion of the contract, he was appointed on our company's fixed-term contract for 2.5 years. Subsequently, the employee resigned from his job and unfortunately passed away due to illness after resigning.

Now, his wife is claiming gratuity for the period he served in our company. Is the company responsible for the gratuity payment?

The total period of five years includes the time under the third-party contract and the company's fixed-term contract. Please provide guidance on the above issue.

With warm regards,
Sdd.

Gratuity Payment Obligation

The Gratuity Act states that "the completion of continuous service of five years shall not be necessary where the termination of the employment of an employee is due to death or disablement." Hence, you would have to pay gratuity to the employee even if they had not completed five years of service continuously while in your payroll. However, since you mentioned that the employee passed away after resigning, I believe you are not liable to pay gratuity.

Regards,
Aparajita

Thank you, Aparajita. But my question is, that employee was appointed through a third-party contract for 2.5 years, and then 2 years through the company's fixed-term contract for 2.3 years. Is this period to be combined and considered as his continuous service?

Again, the employee was working in a worker category, i.e., in the production department.

Waiting for a reply.

Regards,
Sdd.

When considering your company's situation, it is important to focus on the time period during which the employee was on your payroll, specifically 2.3 years. The 2.5-year period when the employee was under a third-party contract should not be included in this calculation.

Regards,
Aparajita

Gratuity Payment Upon Employee's Death

The gratuity becomes payable upon the death of the employee, provided the employee is still employed by the organization. If the employee has left the organization by resigning, then in such a case, the company is not liable for gratuity payment.

Thank you.