Understanding Gratuity for Nominees: How Are Shares Divided Among Family Members?

Hi team members, could you please share with me the following information regarding gratuity:

1. What is the percentage rate of the gratuity amount paid to the nominee of an employee?
2. How many nominees are entitled to gratuity after death and up to which age?
3. If the nominees are two unmarried children, a wife, and dependent parents, what will be the percentage ratio?
4. Does the employer pay the gratuity amount to the nominee (wife) only if she is mentioned in the nomination form, or are dependent parents entitled if they are not included in the form?
5. What will happen if the mother takes all the gratuity amount and does not distribute it to the children and then gets remarried?
6. Is the gratuity amount paid in installments, and if the mother gets married, is the percentage for the mother equally distributed among the children?
7. If there is gratuity insurance as well, then I assume the gratuity is paid in installments but for a longer duration. Please clear my doubt.
8. Can a brother/sister be made a nominee?

Please share the answers. Thank you in advance. Inquisitiveness is the ladder of success.

Could you please share with me the following information regarding gratuity:

1. What is the percentage rate of the gratuity amount paid to the nominee of an employee?
2. How many nominees are entitled to gratuity after the employee's death, and up to which age?
3. If the nominees are two unmarried children, a wife, and dependent parents, what will be the percentage ratio?
4. Does the employer pay the gratuity amount to the nominee (wife) only if mentioned in the nomination form, or are dependent parents entitled if not included in the form?
5. What will happen if the mother takes all the gratuity amount and does not distribute it to the children but instead gets remarried?
6. Is the gratuity amount paid in installments, and if the mother gets remarried, is the percentage for the mother equally distributed among the children?
7. If there is gratuity insurance as well, then I assume the gratuity is paid in installments, but for how long? Please clear my doubts.

Please share the answers.

Thanks in advance.
Regards.

Nominee Entitlement for Gratuity

As per your query, if a person is married, their spouse is considered the nominee. However, if the spouse remarries, they are not entitled to receive the gratuity amount. In this case, the parents become the legal nominees.

The share of gratuity is mentioned in the form filled out by the concerned employee at the time of joining. The percentage of the share is also specified in this form. If the nominee is one person, they will be entitled to 100% of the gratuity. If there are two nominees, an equal portion will be given.

Please let me know if you need any further clarification or information on this matter.

Thank you.

Suppose an employee dies, are the gratuity and gratuity insurance payments different? Is the amount paid in installments? Up to which age are nominees entitled? Please reply.

Thanks

I suggest you go through Section 2(h), which defines 'Family,' and Section 6, which relates to 'Nomination' under the Payment of Gratuity Act, 1972. I am sure half of your queries will get the answer. If some still remain, you are free to approach members of the cite HR.

Thanks,
BS Kalsi
Member since Aug 2011

Since you have a nomination, the gratuity amount is payable to the nominee only. See Section 4 of the Act. If no nomination is made, then let the claimant move to the Controlling Authority. It is best and suggested that you deposit the gratuity amount with the Controlling Authority, who will disburse it according to the Act. In this way, no claim would arise against you.

Part of Section 4 is reproduced below:

4. Payment of Gratuity.- (1) Gratuity shall be payable to an employee upon 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,

(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:

[Provided further that in the case of the employee's death, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs are minors, the share of such minors shall be deposited with the Controlling Authority who shall invest the same for the benefit of such minors in a bank or other financial institution, as may be prescribed, until such minors attain majority].

Thanks

Regards,
V K Gupta

Approaching the Gratuity Authority

When in doubt, approach the authority under the Gratuity Act, give them a notice, and follow their instructions to the last.

To the best of my knowledge, gratuity is payable as a lump sum and not in installments. Once the money is paid to the nominee, how or what they do with it is their decision. That is more the reason you need to follow the instructions of the gratuity authority so you are not held liable.

Gratuity Distribution After Nominee's Remarriage

As per the nomination, the spouse received the gratuity amount. If he/she remarries and does not give any portion to other nominees such as minor children or dependent/non-dependent parents, is there a provision to retrieve the gratuity amount from him/her and distribute it to the employee's dependent children, parents, etc.?

To the best of my knowledge, there is no such provision. The children will have to make a civil suit in court.

If he gets remarried, then I think there will be no problem. If she gets remarried, then there may be a problem.

In this regard, I may point out that when her kith and kin are not able to get a single penny from her, how can you get back the gratuity amount? Moreover, the nomination of the employee is not challengeable.

However, one question for our consideration arises from your above query: what should we do to safeguard the interests of other family members of the employee?

While the forum will shed light on this issue, I would like to suggest that we should gather details of the employee's family at the time of executing the nomination and share the amounts payable. During the implementation of the nomination, we must also take care of the interests of other family members. It should be noted that we cannot force employees to do so.

Thank you,

Regards,
V K Gupta

Dear Members and Seniors,

There are a lot of good shares here, but I would like to add some of my personal experiences from my past organizations regarding the payment of gratuity, which is very practical and actual.

Case Study 1: Resignation After 5.3 Years

One of our office boys resigned after completing 5.3 years of service. As he did not have much knowledge of the norms, our organization only paid him his salary. After 6 months, he came to the office and demanded the gratuity amount. The company was shocked and asked, "Who told you?" After a long debate, the company provided him with his gratuity.

Case Study 2: Employee Passing Away After Leaving

In another case, one of our old employees passed away one month after leaving the organization (his full and final settlement was still in process). Now, all his family members have come to Jaipur asking for financial help. The company provided them with all his full and final settlement except for the gratuity. The company had to provide his gratuity in installments because the family visited the company headquarters every 2 months in a "Please Help" mode.

In both of these examples, I believe the company was in the wrong. However, sometimes companies face practical situations with particular employees, so some companies pay gratuity voluntarily.

Thanks

Please let me know if, in the case of death, the requirement of rendering continuous service for 5 years is not necessary for gratuity, then how much working time is mandatory for entitlement in case of death.

Regards,
Anuj Saini

You have posed a very important yet slightly complicated query. Sh. Dhrao has rightly mentioned that there is no stipulation of a minimum period for death cases in the PG Act. However, I can only speculate that a minimum period of one year may be required to be eligible for fifteen days' salary, which will be payable to the nominee of the deceased.

I believe a thorough debate is necessary on this issue.

Regards,
BS Kalsi
Member since Aug 2011