Gratuity Payment Delays for Deceased Employee: Should Employers Pay Interest?

Dear All,

Could you please help me? There is a delay in the payment of Gratuity for one of our deceased employees. The delay is due to the pending post-mortem report.

As an employer, should I pay interest for the delayed days regardless of the reasons? Please confirm.

Best regards,
Yallappa S

Interest is required to be paid if there is a delay, irrespective of the reason. However, if the reason for the delay is genuine, you may try to settle the amount with the nominee/legal heir.

Did you receive the Death Certificate of the deceased? If yes, then the Gratuity Amount should not be delayed. I am yet to know what the connection of the Post Mortem report is with Gratuity. Provision for the PM report is given within 24 hours of the PM; the detailed PM may be delayed, but that should not hamper the Gratuity Payment, to the best of my belief.

I'd like to request a conjunctive reading of sec. 4(1) and sec. 7(3) and (3-A) of the Payment of Gratuity Act, 1972. Section 4(1) lays down that gratuity shall be payable to an employee on the termination of his employment due to the events and subject to the conditions specified therein. Therefore, immediately upon the happening of any such events or contingencies, the employer's liability to pay gratuity commences.

Sec. 7(3) mandates the employer to arrange to pay the amount of gratuity within 30 days from the date it becomes payable to the person to whom the gratuity is payable. If not, the liability to pay interest commences from the date it actually became payable as per sec. 7(3-A). To avoid the interest burden, it is always better to deposit the gratuity amount with the Controlling Authority as soon as possible within 30 days of the date it becomes payable in case of any difficulty.

All employees irrespective of status or salary on rendering of 5 years' service, either termination, resignation or retirement are entitled for Gratuity. In case of Death or disablement continous 5 years service is not required.

Thanks, Umakanthan Sir, but the main issue is we did not take any disciplinary actions during his service period (like issuing a letter regarding terming his absenteeism period as a break in service) as per Section 2A(1), which reads as follows: an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as a break in service has been passed in accordance with the standing order, rules, or regulations governing the employees of the establishment). No doubt he is eligible for gratuity, but whether any gratuity amount is payable to him in the year having less than 190 attendances.

Warm regards