Struggling with Gratuity Delays: How Can I Ensure My Payment is Processed Correctly?

Hi All, I worked in a market research company for a period of 6.6 years. Recently, I have resigned due to personal reasons. I joined this company on 10th Oct 2005, and my last working day was 1st May 2012. Until now, I have not received any updates from HR regarding my gratuity amount. They mentioned that this is the first time they are processing gratuities, which is causing a delay. Additionally, is there a requirement to open a new corporate account for gratuity-eligible employees? I have also assisted in signing up a few other gratuity-entitled employees as an assurance to open an account.

Furthermore, they recently changed the salary slip structure due to the gratuity payment, which they claim is exceeding a lakh, though I disagree. For example, the basic salary for the last 6 months has been reduced to Rs. 8580 from the previous Rs. 14900, affecting the gratuity calculation.

I have filled out and submitted Forms (F) and (I) as an employee should to the company. It has been almost two months since I submitted these forms.

Moreover, my HR will be leaving the company by the middle of next month. Can anyone please advise me on what steps an employer should take to process gratuity and what submissions are required from the employee?

What is causing such a delay in making the gratuity payment? Can you inform me of the expected amount of my gratuity?

Regards, Vinay Gowda

Gratuity Payment and Interest

In terms of the Gratuity Act, the employer has to pay gratuity within 30 days of the gratuity becoming payable. Therefore, you can inform HR by quoting the Gratuity Act to expedite your claim. You will also be eligible for interest on delayed payment.

Regards,
B. Saikumar
Mumbai

The gratuity amount will not only vary but will likely be almost half of what you were supposed to receive if your last basic salary had remained the same. Therefore, I recommend that you file an application before the Appropriate Authority under the Act, providing both salary slips to demonstrate any ill intentions of the employer in this regard.

The rest has already been addressed by Saikumar.

Regards

Gratuity Eligibility and Calculation

The gratuity you are eligible for will be 15 days' salary for every completed year of service, computed at the last salary drawn. The per-day salary rate for the 15 days' salary is calculated by dividing the monthly salary by 26 (according to my calculations, it's Rs. 51,600).

They will have to go by the last salary slip you have with you. They cannot, at this time, change the salary structure with retrospective effect.

The amount is payable within 30 days of your submission of Form J. I hope you receive an acknowledgment.

Addressing Gratuity Issues with Management

You need to speak directly with the owners now and not to HR since HR has done nothing. Tell them you have worked sincerely for 7 years and left on good terms and that you are very disappointed with what HR is doing regarding gratuity. Tell them it is unfair of them to change the basics with retrospective effect and is actually illegal. You may also inform them that you are being advised to complain to the labor officer, but you do not wish to do that as you have had a good relationship with the company and do not want to spoil it.

If speaking to the owners does not improve things, then you may have no option but to go to a labor officer or seek the help of a labor lawyer.

Regards

Gratuity Eligibility and Calculation

Your gratuity is eligible for 6 years.

Formula for Gratuity Calculation

Formula: Current Basic * 15 Days * Number of Years / 26

Calculation Example

Calculation: 14900 * 15 * 6 / 26 = Rs. 51,577/- Final Amount

Thanks & Regards,

Harendra Kumar
SR HR Officer
Noida (UP)

Thank you for the calculated amount and your advice. Saswata, I provided them with Form (F) and asked them to check my basic pay to calculate the final amount. I also requested an acknowledgment from them. However, HR mentioned that she is not familiar with these forms and other processing procedures. They informed me that they will revert by the end of next month. She has been with my previous company for over 3 years and has shown negligence in processing employee requests and responding to emails.

I have highlighted the potential future consequences to them in an email and am awaiting a response from senior management. I trust that they comprehend the 7 years of rapport we have built.

Once again, thank you. I will stay in touch with all of you once the process is completed.

Regards,
Vinay Gowda

Since she claims not to know about the forms, perhaps you should mail her the relevant sections of the act. I think your employer will not disregard 7 years of relationship for 50k. I suggest you make it easier by providing a detailed explanation and summary of the sections in support. I mean sections that support the computation.

There is some miscommunication on my part, I think. There is no concept of opening a gratuity account.

Gratuity Payment Process

When the employee leaves service (either by resigning or termination) and has completed 5 years of continuous service with the organization, they are entitled to be paid an amount of money (15 days' salary for every completed year of service) as Gratuity. In case of death, the gratuity is payable irrespective of whether the employee has completed 5 years.

This money is payable to the employee directly by the company. There is no involvement of the labor department of the government except in the case of a complaint. The company does not have to deposit money with the labor department or any other authority. They have to pay directly to the employee.

As per the rules, within 30 days of the employee giving the form (claiming their gratuity), the employer has to pay the same.

Gratuity Fund Provision

There is a provision for creating a gratuity fund so that the company has the money to pay when an employee leaves. That is primarily to make it easier for the cash flow. The liability is to pay anyway, irrespective of whether the company has a gratuity fund or not.