Termination Of 14yes Old Employee

Dear All, We have terminated an employee who worked with us for almost 14yrs. We have issued plenty of warning letter and taken apology letters from his as well. And we have calculated gratuity @ 15days per year and also paid 1 month wages. But he is asking gratuity @ 60days per year as retrenchment. Please let me know the correct procedure & calculation to be followed to clear his dues.

Dear skantharaj,
Please provide below information
Designation & Nature & Duties of employee :-
Date of Joining;-
Date of leaving:-
Basic Wages
Gross Wages
Reason for termination

Hi Kantharaj,
Gratuity to be paid 15/26 ie; 15days per month not 15days per year, once the employee completes his 4.09yrs of service he is eligible to claim the same. But you need to deduct every month @ 4.81% from his basic.

Dear Sakanthaaraj
In your case you have stated that plenty of warning letters issued, he tendered appology .Terminating an employee having worked for about 14 years without issuing any show cause notice, without holding any domestic enquiry is illegal ,unlawful and unjustified. Workman not given an opportunity of being heard,Apart from gratuity you will be liable to pay retrenchment compensation also.You can not simplu hire and fire.
any queriies please contact.
RLDhingra, Advocate
Labour law Conultant, Delhi
9818309937
Email: [Login to view]

Dear MVK Sarath Raja
An employee who has completed five years of continuous service is entilted to payment of gratuity under the PGAct 1972 Gratuity is paid at the rate of 15 days salary for each year of completed service. No deduction of whtsoever (4.81 %)is to be made from the salary the employee.
RLDhingra,Advocate
Labour law Consultant Delhi ,
9818309937
Email: [Login to view]

I agree, you can't hire and fire people in India. How much one has to pay as retrenchment compensation? Is there any established law for that?
Best regards,
SHD

Dear Mr. Dhingra,
Please elaborate, what you are trying to say, I am not clear. @4.81% on every month basic is must, as of my knowledge a minimum of 15days per month to be paid as gratuity. Please clarify.

Hi All,
A)
Mr. Dhingra is very right in saying that there will be no deduction from the basic.

The gratuity has to be paid by the employer without making it an employee contributed affair

The rate of calculation of gratuity is@4.81% of the basic is only for the purpose of computing the CTC and taking in to consideration the gratuity rule. This is how the provisions are made with your finance/ gratuity trust/ LIC whichever administers your gratuity scheme. No where it is mentioned that you have to deduct this amount from employees salary and pay later.

The mode of payment is after completion of five years of continuous service: 15 days basic to be paid for every year of service completed.

If the employee is asking 60 days gratuity for every year completed then he is asking is 45 days in excess. Such considerations will be purely at the discretion of the management.

The grounds for termination have to be made clear to the terminated person, that do not justify any additional payment.

Kind regards

Dayanand L Guddin

Dear Friend,

Here the problem is not with mode of termination of an employee who completes 14yrs of service. The issue is with regard to payment of additional amount of Gratuity at 60days per year by way of retrenchment compensation.

On what basis the terminated employee is asking for this amount is not clear. The services of permanent employee can be terminated by following the regular procedure of issuing charge sheet, holding an inquiry, issuing final show cause notice and dismissal order as per the principals of natural justice. but in the instant case it appears that the management did not follow this rule.

under the given circumstance, the employee is free to challenge the decision of management in LC / Conciliation officer etc or to settle the case by having dialog with management. But, he cannot ask the management to pay him the gratuity / retrenchment etc at 60days per year which is against for the provisions of gratuity act or ID act. the retrenchment compensation shall be paid at 15 days average pay for every completion of year of service for 14 yrs in the given case which might be equivalent to gratuity payable, but not more than that.

Therefore, I suggest the management to pay retrenchment compensation to terminated employee at 15days average pay for 14 years of service as they already paid gratuity to him. If the employee agrees for this proposal they can pay the same or else the employee is having the remedy to invoke the jurisdiction of labor court to get an appropriate relief.

Regards

NVRao
Naidupeta

Hi Mr. Kantharaj,
I have slight confusion, as stated by you that after completion of 4.09 years an employee becomes eligible for Gratuity but the act says only after completion of 5 years on becomes eligible.
Pls throw some light on the same.