Navigating Delayed Gratuity and PF: What Legal Steps Can My Friend Take Against His Former Employer?

Dear all, my friend resigned from his job on April 2nd, 2012. What is the time frame for receiving Gratuity and PF? The company's HR department states that the company has its own policies, and Gratuity and PF will be provided within 3 months. He used to work for a company, let's call it X, which later split into two entities - Y and Z. He resigned from Z company after working there for 2 years. Colleagues who resigned even before completing one year did not receive PF. The HR personnel mention that company X did not submit the required forms to the PF office, causing a delay in receiving the PF amount. Do the company officials have the right to withhold PF citing this reason? The company has a high attrition rate (even employees who worked for 5 years wish to resign because salaries are very low). I suspect that due to this, the management is delaying the PF and Gratuity further. Could you please advise my friend on the legal actions that can be taken against the company? Is there a court similar to the consumer court that can also recover the lawyer fees from the employer?

Thanks in advance.

Provident Fund and Gratuity Settlement Timelines

As far as Provident Fund (P.F) is concerned, it may take a two-month waiting period and another 45 days for the settlement of the account if there are no issues like inadequate information or mismatch of details, etc.

Gratuity Payment Timeline

Regarding gratuity, the employer should pay within 30 days of it becoming payable. You should address the delay with the P.F office for the employer's delay in submitting the P.F forms.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Thank you for your reply, sir. Can you please enlighten me on the exact period for receiving gratuity? Is it 30 days after resigning? If we escalate the matter to the P.F. office, will they respond? Please let me know. Will they penalize the employer by charging any interest for the delay period?

Thank you and regards.

The employee shall make an application for the payment of gratuity on resignation or retirement. Within 15 days of receipt of the application, the employer has to inform in either Form L or M (central rules) whether the gratuity is payable or not. Thereafter, within 30 days of the gratuity becoming payable, i.e., the date of resignation or retirement, the employer shall pay the gratuity. Going by this procedure, it appears that the gratuity is paid within 30 days of the receipt of the application.

As a victim of delay in the settlement of the P.F claim, you should be concerned with your interests. It is always advisable to settle the issues with the employer amicably. You may follow up on the matter with the employer further.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai.

I didn't understand what you said about "within 30 days of gratuity becoming payable" and "30 days of receipt of application" - I am confused. Please elaborate.

Regards.

Going by the language of Section 7(3) of the Gratuity Act, it is safer to compute 30 days from the date of submitting the application rather than from the date of resignation.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

"Compute 30 days from the date of submitting the application rather than from the date of resignation" - The date of submitting the application is in the hands of HR people. So, whenever they submit, from that date + 30 days, we get gratuity credited. Is there any specific timeline before which the HR people have to submit the application?

Gratuity Application Processing Time

The 30-day period is to be computed from the date of submitting the application by the employee to the company, not by HR to the concerned department. HR may take their time to transmit the application to the concerned department. The employee cannot wait eternally for his gratuity.

Regards,
B. Saikumar

PF Crediting and Annexure K Concerns

As I mentioned, my friend resigned on April 2nd, and May 2nd is his last working day. His form was submitted on July 13, 2012 (60 days from the relieving date as advised by HR). HR personnel are stating that the time period for crediting PF into the account is still 60 to 90 days. He requested an earlier crediting date, but they responded by saying that they are providing a free service by assisting ex-employees with PF matters. They mentioned that employees should handle their PF issues themselves. Is this true? One concern is the delay in processing.

Additionally, HR personnel mentioned that PF officials are confused about Annexure K. He has not secured a job yet. Considering their statement, does Annexure K play a role in this scenario? I understand that Annexure K is essential for transferring PF funds from one account to another new account. When he tries to check the status of his PF application on the EPFindia site, it shows "your application is rejected and it is being sent to the address mentioned by you."

Please enlighten me on the above doubts.

Thanks and regards.