Gratuity Payment Dilemma: Should It Be Based on Last Working Day or Final Letter Date?

Case Study on Gratuity Payment Calculation

Dear HR Members,
This is a case study related to the Payment of Gratuity for an employee who has been absent from the workplace for four months. We have issued 3-4 letters, to which he only replied to the first letter, stating that he is sick and on bed rest. Subsequently, he has not responded to any further correspondence. The management has now decided to initiate separation proceedings, treating his actions as abandonment of his services.

Question on Gratuity Payment Date

The question at hand is regarding the last date for calculating the Gratuity Payment. Should it be based on the employee's last working day or the date of the final letter issued after 3-4 months of the actual working date? Please share your insights in accordance with the Payment of Gratuity Act in UP.

Regards,
M.K. Chaubey

What I understand from your post is that your employee has absconded, and you want to settle his dues, therefore asking for Gratuity calculation. However, if the employee has worked only for 4-5 months, gratuity payment will not be applicable as the eligibility requirement is either the employee should have worked for a full 5 years or more than 4 years and 6 months. Please do check the terms mentioned in his appointment letter.

If gratuity deduction was being done as a part of CTC (many companies do this), then the case is different. You may check what policy your company had followed in similar absconded cases.

With regards,

Vaishalee Parkhi

[LinkedIn Profile: https://www.linkedin.com/pub/vaishal...khi/62/9ab/6b0]

In continuation of my post, I would like to mention that the employee has completed more than 5 years, meaning he is entitled to gratuity payment. However, my question pertains to the calculation of the absentee period. As he was absent from the workplace for 3-4 months, the management has decided to treat it as an absconding case and proceed with his separation from the active employees list.

Regards,
M.K. Chaubey

Why should there be this confusion? Absent is absent, and after being absent, he has not resumed duty. There ends the matter, and the 'continuous service' link has snapped. Ensure that you send a registered letter to the hospital if he was undergoing any treatment. Now, the only action to take is to follow the procedure to establish that you have not spared any steps to track him. Send registered and ordinary posts, issue newspaper ads, paste the notices on your notice board, on the door of the last known address, etc. If you don't mind, register an FIR also with the jurisdictional police. Initiate a formal inquiry, conclude, close his service, calculate his F & F settlement, and intimate through proper communication to him. If there is no response, deposit the amounts to the Designated Officers of the Labour Department and close the file. What else can you do? Take the help of your SO. If none, follow the procedure.

Thank you.

The question asked is, what would be the last date for the calculation of Gratuity? As per my best knowledge, it should be his/her last working date with your organization.