Gratuity Dilemma: Should a Company Pay for 20 or 28 Years After an Employee's Passing?

An employee of a company died at the age of 50 after completing 20 years of service. Unfortunately, the company does not have a LIC-linked Gratuity Policy.

Is the company liable to pay gratuity for 20 years of service or 28 years, including service up to the age of retirement?

Company is liable to pay only for 20 years. If you want, as a gesture of gratitude, you may pay up to 28 years.

Gratuity Payment Obligations

Irrespective of whether the company has linked up with LIC for the gratuity, the company is liable to pay the gratuity to the nominee of the deceased employee. As per the act, if no nomination has been made, then the gratuity will be payable to the deceased employee's heirs. If any such nominees or heirs are minors, the shares of such minors shall be deposited with the controlling authority. The controlling authority shall invest the shares for the benefit of such minors in a bank or other financial institution as prescribed until the minor attains the age of majority.

The company is liable to pay gratuity for 20 years if the deceased employee had completed 20 years of service with your establishment.

Cheers,
A.B.