Can My Annual Bonus Replace Gratuity? Seeking Advice on Payment Rights

Dear Sir, I was employed for 13 years and was paid an annual bonus of 8.33% plus 50% extra of the bonus amount. When I left, I demanded gratuity but was told that the annual payments already include both the bonus and gratuity liabilities of the company. The company, which has only 17 employees, does not have a separate gratuity fund. Should I accept the annual payment as final, or do I have the right to demand gratuity as a separate payment? Regards, Arvind

Gratuity Payment Obligation

Additional bonus paid to you will not compensate for the gratuity payable. It is mandatory that the employee, like you, should be paid gratuity. The Act is applicable to all factories or mines irrespective of the number of employees and to other establishments (shops and commercial establishments) employing 10 or more persons. As such, your company is covered by the provisions of the Payment of Gratuity Act, and the company should give you gratuity. You can demand payment of gratuity at the rate of 15 days' pay for every completed year of service, and it would be approximately 6.5 months' salary.

Regards,
Madhu.T.K