How Should We Handle Gratuity and PF for an Employee Who Left Without Notice?

Employee Gratuity and PF Settlement Inquiry

Our company is a logistics private limited company.

An ex-employee worked for more than 5 years in our company. He was the Warehouse Manager for one unit that was about to close. He worked day and night and provided significant support to close the unit. During this time, his marriage was also scheduled.

Once the unit was completely closed, he handed over all responsibilities but did not return to the office for some time. When inquired, he mentioned being busy with marriage preparations and lacking support.

The management at the Head Office was considering transferring him to another unit internally, but this was not communicated to him. They awaited his return to discuss this. However, he did not show up for a month.

One day, he visited the office to distribute his wedding card. The top management accepted this gesture, with the Director personally wishing him well.

Even after his marriage, he did not return to the office, citing pending customs and rituals.

Due to his prolonged absence, the top management, including the CEO, GM, and Director, recommended sending a termination letter via post, which was duly sent and acknowledged. Subsequently, he joined a new company.

After 7 to 8 months, he approached our office seeking PF claims. He casually spoke to the CEO, requesting gratuity. Following this, he emailed the CEO formally requesting gratuity, which the CEO forwarded to me for further action, asking to consult with the Director.

The Director has inquired about the settlement of gratuity and PF for an employee who left without notice or intimation.

Seniors, please advise on the appropriate steps to be taken in this situation. I need to convey this to the Director.

Thanks & Regards,

Suman
HR

Even if the employee doesn't complete his relieving formalities as per the statutory requirements, gratuity has to be paid.

Hi Jeevarathnam, can you please explain to me the statutory clause for gratuity to be paid? I need your guidance.

Regards,
Suman
HR

We would like to quote the clause here:

Payment of Gratuity

(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
- (a) on his superannuation, or
- (b) on his retirement or resignation, or
- (c) on his death or disablement due to accident or disease.

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement. Please be informed that every employee who has completed five years of continuous service is eligible to claim for the payment of Gratuity, even if the employee is terminated after completing five years.

We also like to quote from the "Notes of Cases"...

Disciplinary proceedings after five years of service - no bar to gratuity

If an employee completes continuous service of five years and then gets involved in some disciplinary proceedings, it cannot be said that he is not entitled to gratuity as provided under the Act and the Rules. [Ahmedabad Municipal Corporation Vs Elivina Samualbhai Christian - 2002 (1) LLN.1087: 2002 (1) CLR. 108 (Guj. H.C.)]

Hope you will get a clear idea now.

Ordinarily, gratuity becomes payable by the employer within 30 days from the date of termination of the services of an employee. Section 4(6) of the Payment of Gratuity Act, 1972 empowers the employer to forfeit the amount of gratuity either wholly or partially if the termination is on account of riotous or disorderly conduct or any other act of violence on the employee's part, or for any act which constitutes an offense involving moral turpitude committed in the course of employment. It also permits the employer to proportionately forfeit gratuity to the extent of damage or loss caused by the employee in case of termination for any act of willful omission or negligence causing damage or loss to or destruction of the property of the employer.

A careful reading of your narration does not indicate such reasons for his termination. Therefore, deposit the actual amount of gratuity due to him by crediting his bank account immediately, together with simple interest at 10% per annum from the 30th day of his termination till the date of deposit.