How Should We Handle Settlement for Deceased Employee Without Next of Kin Certificate?

Guidance Needed on Settlement Process Without Next of Kin Certificate

I have a very peculiar case. One of our female employees (unmarried) resigned from the services due to self-sickness. Since she was unmarried and her parents had expired long ago, she was residing with her sister. However, there is no proof of residence for her. There is no mention of her name in the ration card, and she did not have any other address proof. The employee died in the hospital immediately after resignation.

Our company normally takes 15 to 30 days to process the full and final settlement, but the employee died in the hospital within this period. Unfortunately, she had not made any nomination. Her sister is the person who took care of her during her final days. However, we are facing difficulty in obtaining the next of kin certificate. Due to the lack of the same, the PF withdrawal process is pending.

I seek guidance from the seniors: Is it advisable to recommend the management to clear the gratuity and other full and final settlements without a next of kin certificate? Will there be any consequences if the same is cleared without a next of kin certificate?

I am in need of guidance from the seniors.

Regards

Ask the sister to produce a succession certificate. How big is the amount involved?

If HR is proactive, documents of employees will be verified from time to time and updated with the latest changes. Employees should be advised on the importance of proper nomination, latest verified addresses, etc.

Dear sir,

Please follow the formalities suggested by Mr. Nath Rao as it is necessary to manage things practically. There has been a lapse on the part of your company as well, such as the absence of an address, etc. In cases where no nomination has been declared by the deceased employee in the documents, a succession certificate is the only document that clarifies the legal status of the claimant(s) in relation to the dues to be paid.

Regards,
RDS Yadav
Labour Law Adviser

If the amount is not much (I think the limit is Rupees one lakh - can be easily verified), then an indemnity bond by other family members and an affidavit would suffice. However, a succession certificate is the best option as it would help in any other claims by the sister in the future.

Dear Nathrao,

You can seek help from the local newspaper or her area newspaper, which typically provides a 15-30 day period. This allows time for any family member to claim the information, which can also legally assist you.

Legal Considerations for Claimant Verification

It is legally safe to ask the claimant to produce a succession certificate from a competent court. This will keep the company clear from any issues or subsequent claimants. Putting an ad in the newspaper, etc., is okay, but we as HR need to protect the company's interest first while equally looking after the staff.

Up to some amount, a mere indemnity bond will suffice, but in the circumstances described by the original querist, the company sadly does not have full details or any details on the next of kin, etc. So, play it safe. It is costly to get a succession certificate, but there is no suitable option.

Document Verification and Updates

HR needs to verify documents from time to time and proactively ask staff to update them. For example, if someone gets married, remind them to change their next of kin.

I hope this helps. Let me know if you need further assistance.

Regards

The payment of gratuity act already provides for such a scenario. Where there is no nominee, or where there is a dispute on who should get the money, the Company should approach the authority under the gratuity act (generally the labour commissioner) and ask him to decide who will get the gratuity payment. You may be required, under the order of the commissioner, to deposit the said amount with him pending his decision. Details of the procedure are given in the act and rules.

Similar situation in my company. Can anyone help me with the proper letter drafting for the final settlement in such a case?

Regards,
Vaishali
HR