Am I Eligible for Gratuity After Termination Despite Company Policy? Seeking Advice

I am writing to inform you that due to your excessive leaves, HR has decided to terminate your services at the Limited Company in Haridwar, SIDCUL. Your last day in the company will be March 7, 2013, and all necessary formalities have been completed. I have inquired with HR regarding my gratuity entitlement, and they mentioned that the Director stated, "Gratuity is not implemented in our company."

I have been with the company since March 3, 2007, with no breaks in my service until my last day on March 7, 2013. I would like to know if I am eligible for gratuity and if so, what is the procedure to claim it from the company.

Thank you for your assistance.

Best regards,
VKS

Yes, you are eligible for gratuity. Please fill out the attached form and submit it to the employer via registered post. You will receive a positive result.

Thank you.

Regards,

First of all, sir, were you given a chance to explain before being terminated for excess leaves? It seems from your words that they have hurriedly completed the termination process without following proper rules of natural justice. Anyways, it seems now it's too late for all these queries as they have already completed the process.

Eligibility for Gratuity

Now, regarding your main query, you are eligible to claim gratuity. You have successfully completed 5 years/4 years and 240 days in the last year.

Company's Gratuity Fund Obligation

However, your company does not have a gratuity fund account. In this case, your employer is liable to punishment or imprisonment, as I suppose your limited company has more than 10 employees and thus the employer is not following the statutory obligations.

Procedure to Claim Gratuity

Now, according to the law...

In case the employee is not paid the due amount of gratuity, he should apply, ordinarily within thirty days, in Form-I to the employer. If an employer fails to pay the due gratuity even after receiving notice in Form-I, the claimant employee, or his nominee, or legal heir, may, within ninety days of the occurrence of the case for the application, apply in Form-IV to the Controlling Authority for issuing directions to the employer. After conducting the enquiry as prescribed, the Controlling Authority will determine the amount payable and direct the employer to make the payment. If the employer fails to comply with the direction, the Controlling Authority can direct the Collector to recover the amount due and pay it to the applicant.

Please wait for seniors to provide more views on this.

I agree with the view of Mr. Mukherjee that the management has not given you an opportunity to represent your absence. The management has not followed the law of natural justice. You have an option to challenge the one-sided order regarding the termination of your service. You can file an individual demand notice under Section 2-A of the Industrial Disputes Act, 1947, regarding your illegal and unjustified termination.

Gratuity Eligibility

As you have completed five years of service and almost completed six years of service in the company, you will definitely be eligible for the gratuity benefit as provided in the Payment of Gratuity Act (PGA). Ask your HR the reason why you are not eligible for gratuity, and one more question you can ask is, "Will gratuity be provided to the worker at the discretion of the company's director, or is it derived from the provisions of the Payment of Gratuity Act?"

Friend, there's no need to worry. Go ahead, and you will definitely find success in this matter.

Regards,
R B Yadav
Advocate

Thank you all for the best directions and solutions. I am extremely thankful to all of you for your advice.

Here, I want to know one more thing: is the "Payment of Gratuity Act 1972" applicable in Uttarakhand?

Regards,
VKS

Yes, you are eligible for gratuity as per government policy. The gratuity payable under the Payment of Gratuity Act is liable to full or partial forfeiture under different circumstances.

Payment and Forfeiture of Gratuity

Section 4(1) of the Payment of Gratuity Act 1972 deals with the payment of gratuity, whereas Section 4(6) of the Act deals with the forfeiture of gratuity.

Section 4(1) reads as follows:
“Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than 5 years:
- i) on his superannuation, or
- ii) on his retirement or resignation, or
- iii) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of 5 years shall not be necessary where the termination of the employment of any employee is due to death or disablement.”

aipnbsf.org/files/Payment.pdf - site

Gratuity Payment Obligations

Unlike other statutory payments, companies are required to make gratuity payments as per the calculation under the Act when an eligible employee leaves or retires after 5 years of service. Most companies opt for the group scheme offered by LIC, which then makes the payment to such employees.

In this case, once the employee can establish service beyond 5 years, the company can fulfill its obligation by making the correct payment and claiming a tax deduction as a gratuity payment. There is no question of someone saying we have no gratuity scheme, as such benefits are mandatory for eligible employees.

Regards,
JobXavier

Dear contributing Members,

We have never tried to ascertain how many years of service Mr. VK Sorayan has put in his company. It is an important factor to consider before giving him advice. I agree with my friend Mr. Job Xavier, who has mentioned the eligibility provisions of the Act. It is a Central Act, which states are bound to follow by framing their own rules under the Act or by adopting the rules of other states. There is no question of the start of the scheme or not. In a normal case, when a state is carved out from a larger state, the newly formed state adopts the rules of its parent state through a gazette notification. For example, when the State of Haryana was carved from Punjab, the labor department of Haryana adopted most of the regulations/rules prevailing in the State of Punjab through a gazette notification with suitable modifications suiting their requirements.

My advice is if Mr. Sorayan feels that he is eligible in terms of the provisions of the Act as explained by the members, he should file an application in the prescribed form with the Controlling Authority of the Area.

Regards,
BS Kalsi
Controlling Member

Please read the legal provisions for the payment of gratuity. As per the provisions, you are required to send a notice to the company.

Regards,
Ram Navghare
Manager - IR & Admin

Please read the legal provision for the Payment of Gratuity. As per the provision, you are required to send a notice to the company.

Regards,
Ram Navghare
Manager - IR & Admin

Attribution: https://www.citehr.com/452081-gratui...#ixzz2Ld0CVpUp

I believe you may have overlooked the period of service clearly stated by VKS. It spans from 04MAR07 to 07MAR13, which is slightly over six years. This automatically renders him eligible for Gratuity since there is no break in service (as also indicated by him).

Regards,
S.K. LIMAYE MBA/HR

You are 100% eligible for gratuity. Please follow up and ensure you receive it. No company can escape from paying gratuity to any employee who has worked in the same company for 4 years and 8 months (approximately 5 years in total). You have worked almost 8 years. Your employer is not being truthful. No company can claim they have not introduced gratuity. The company and the directors who make such claims are punishable under company and labor law.

Gratuity Act 529 for Employers

Please refer to the Gratuity Act 529, which states:

5. (1) Every employer who employs or has employed fifteen or more workmen on any day during the period of twelve months immediately preceding the termination of the services of a workman in any industry shall, on termination (whether by the employer or workman, or on retirement or by the death of the workman, or by operation of law, or otherwise) of the services at any time after the coming into operation of this Act, of a workman who has a period of service of not less than five completed years under that employer, pay to that workman in respect of such services, and where the termination is by the death of that workman, to his heirs, a gratuity computed in accordance with the provisions of this Part within a period of thirty days of such termination.

- Thanks
- Venkat
- Bangalore

Before concluding that the employer is guilty, have we tried to find out:

1. What is the total manpower in the industry cited?
2. What was the extent of the 'irregular attendance' of the gentleman?
3. Whether he was struck off the rolls once or more times due to poor attendance and taken back again?
4. Whether the continuity of service was there?

It will indeed be foolish management to deny gratuity without a strong basis.

Gratuity Act Applicability and Steps for Claiming

The Gratuity Act is applicable throughout India, and you are eligible. Read the bare act and provide its copy to HR for necessary action. It seems that your director lacks legal understanding; hence, he made that statement. It is an immature statement. Even if they do not include this amount in your full and final settlement, take its copy and submit it to the labor office, mentioning that you have not received this gratuity amount. They will assist you in resolving the issue. DON'T WORRY.

Regards,
Satish Verma
Nashik

Yes, you are eligible for the PGA as you have completed 5 years of service. The statement of the Director is not appreciable. You may contact the local Dy. Labour Commissioner for further details.

Regards,
S.K. Tyagi (Sr. Manager-Legal) Mawana Sugars Ltd.

Before concluding that the employer is guilty, have we tried to find out:

1. What is the total manpower in the industry cited?
2. What was the extent of the 'irregular attendance' of the gentleman?
3. Whether he was struck off the rolls once or more times due to poor attendance and taken back again?
4. Whether the continuity of service was there?

It would indeed be foolish management who will deny gratuity without a strong basis.

I fully agree with Rramxx. The complainant himself says that he has been terminated on the ground of excess leave, so on which ground can we advise whether VKS has continuity of service as per the Gratuity Act? His complaint contradicts.

I want to clarify that I was on leave from January 20, 2013, to January 27, 2013, but due to some reasons, I could not be present on January 27, 2013. I informed HR that I would reach the office on February 1, 2013. HR agreed and allowed the leave telephonically. However, on February 1, 2013, he retracted his approval of leave in front of the Director. Is this reason sufficient to jeopardize my gratuity?

Thanks & Regards,
VKS

Dear Mr. VKS,

I am sorry to say, how can a company terminate an employee based on just one unapproved day of leave? What does your termination letter state? As per your query, the termination is due to excessive leaves, and by accepting the termination letter, you indirectly admit to this.

Regarding your point, if you have not taken any excess leaves and have maintained continuity in your service, then you are well within your rights to claim your gratuity.

Dear Mr. VKS,

Sorry to say, but how can a company terminate an employee on the grounds of one day leave (not approved)? What does your termination letter state? As per your query, it is termination due to excess leaves, and you have accepted the termination letter, indirectly admitting it.

Coming to your point, if you do not have any excess leaves and have continued your service without breaks, then you can very well claim your gratuity as advised by other seniors.

Gratuity Payment Procedure

Please read the procedure carefully. An employee eligible for the payment of gratuity, or any person authorized in writing, must apply within thirty days from the date the gratuity becomes payable, using Form 'I' to the employer.

The employer, within 15 days of receiving the application, must issue a notice in Form 'L' detailing the amount and date of payment (not to exceed the 13th day). If the employee is not eligible, a notice in Form 'M' must be issued, specifying the reasons why the claim for gratuity is not considered admissible.

If the employee is eligible, the employer must pay within 30 days of the due date, irrespective of whether an application is received from the employee or not.

Regards,
Thejpal Alva

I had taken leave from 20.01.2013 to 27.01.2013, but an excess leave from 27.01.2013 to 31.01.2013 (5 days) was taken with HR approval over the phone. The company terminated my services and settled my account, but they neither provided a written full and final settlement nor a termination letter. They simply informed me that I could not continue my services in the company.

Thanks and Regards,
VKS

I have never taken more leave than allowed by the company, and I have not taken any work breaks during my last service period from March 4, 2007, to my final day in the company (07.03.2013). I have only taken casual leave and have never exceeded a week, which is permitted by the company. The company has not issued any notice or letter regarding excessive leave throughout my entire tenure. Our company is a Heavy Vehicle Company located in Haridwar, SIDCUL, with over 250 employees. This information is accurate to the best of my knowledge.

Thanks & Regards,
VKS

If that is the case, then you should approach the local Labor officer, who will hold your employer accountable. Rest assured that if you have continuity of service, you are eligible for Gratuity. Please follow the advice given by Mr. Thejpal and other seniors.

Thanks & Regards,
VKS