Navigating Gratuity Claims: How Should HR Handle Multiple Spouse Settlements?

Dear seniors, I am a newcomer to the field of HR and am currently dealing with compliance and retirement benefits. I have encountered a peculiar case, and I would appreciate your guidance.

Question: A claim has arisen after the death of an employee for gratuity. The issue at hand is that there are three wives, each seeking a settlement. As an HR professional, what are my obligations? I am considering depositing the gratuity amount with the Assistant Labor Commissioner. What forms are required, and what other formalities do I need to handle from my end? This includes forms, notices, the mode of payment, etc.

Thank you for your assistance.

Regards,

I think you should consider only the lawfully married wife here. Moreover, hasn't the person in question nominated someone from the family? If the first wife is lawfully married and the rest are not, then you will have to consider it accordingly.

You need to see the nomination form, and whoever is a nominee, you may proceed with that person. Secondly, you can check the family declaration given by the employee on joining or while availing LTA.

Hope this helps.

Regards.

It is good if you deposit the amount of gratuity with the Labour Department and then direct the legal representatives to collect the amount from the department.

Regards,
Madhu.T.K

Handling Retirement Dues in the Absence of Nomination

In the absence of a nomination, retirement dues should be paid as per the Succession Certificate. Since there is a dispute in the matter, you should immediately deposit the amount with the Controlling Authority. Otherwise, penal interest will be payable. Detailed procedures for deposit will be available in the Payment of Gratuity Act to be read with the Rules thereof.

Required Documents for Payment

In case it has not yet been deposited, payment should be made to the proper person subject to the production of the following documents:

- (i) Death Certificate.
- (ii) Affidavit that she is the legally married wife of the deceased.
- (iii) Indemnity Bond undertaking to indemnify the Company, in the event of any wrongful payment to her.
- (iv) Succession Certificate if necessary.
- (v) Identity Card as recognized by the Government.

Certified true copies of each of the above documents should be obtained from the recipient for the Company's records.

Suggestion for Handling Gratuity Claims

My suggestion regarding your query is as follows: If the employee is eligible for gratuity, you must check his personal records. Verify his family details and determine the actual wife based on your records. If there are multiple claimants, request marriage certificates, along with death certificates, ration cards, and voter ID cards. Subsequently, meet with your factory's labor inspector. Remember, all communications should be in writing from both parties; avoid verbal discussions as this will assist in managing and potentially avoiding employee claims.

Additionally, remain composed and communicate calmly with all parties involved. I trust that my advice, based on my experience, will prove to be very helpful to you.

Regards,

The Controlling Authority under the Payment of Gratuity Act, 1975, is the local Labour Court and not the Labour office as suggested by one of our learned friends. Therefore, approach the Hon. Labour Court, deposit the amount of gratuity payable to the deceased employee in the court. The court will then send summons to all concerned and decide the claim suitably. Your job will be only to submit papers as called from the court. Apart from this, you will also not be required to pay interest on the amount for delayed payment.

Best of luck,

Regards

Nominee Responsibilities and Payment Distribution

The nominee holds the money in trust for the benefit of the beneficiaries until the payment is distributed to them as per their entitlements. In the event of the death of the employee, only the person mentioned in the will becomes entitled to receive the payment. In the absence of a will, the payment is distributed as per the Succession Certificate issued by the court.

Please follow the above procedure and, if necessary, consult a labor law expert in the matter. You are supposed to release the payment within 30 days from the date of termination of the contract of the concerned employee, subject to his entitlement and the submission of the prescribed form duly filled in and signed by him.

In case of any disputes in the matter, the payment should be deposited with the Controlling Authority. The detailed procedure for the deposit is laid down in the Payment of Gratuity Act, to be read with the rules thereof.

Payment of Gratuity

Section 5 of the Payment of Gratuity Act outlines the provisions for the payment of gratuity:

Payment of Gratuity:

Gratuity is payable to an employee upon the termination of their employment after they have rendered continuous service for not less than five years, either on their superannuation, retirement, resignation, or in the event of their death or disablement due to accident or disease. It is important to note that the completion of five years of continuous service is not required if the termination is due to death or disablement.

In the case of an employee's death, the gratuity amount is to be paid to the nominee specified by the deceased. If no nomination has been made, the amount will be given to the legal heirs. In situations where the nominee or heirs are minors, the share belonging to the minor must be deposited with the controlling authority for investment until the minor reaches the age of majority.

As an HR professional, your responsibility is to release the gratuity amount to the nominated individual designated by the deceased. If a nomination exists, you are not obligated to determine the legal heirs. Only in the absence of a nominee should the amount be deposited with the controlling authority for resolution.

It is crucial to understand that the nominee is not the owner of the gratuity amount but rather a custodian entrusted with distributing the funds to the legal heirs. If the nominee fails to distribute the amount to the legal heirs, the heirs have the right to seek recourse through the civil court as the controlling authority does not have jurisdiction over such matters.

Thank you.

If any employee dies and there is no nomination form, but his wife and father are claiming gratuity through oral discussion only, what should be done?

I think you have not read the entire replies before posting this query. It has been clarified very categorically that in the absence of nomination, the gratuity can be paid only to the person who is producing the legal heir's certificate.

Therefore, if both the spouse and father of the deceased come forward with a request for payment of gratuity, hold it and pay it once you get the legal heir's certificate.

Madhu T K