Dear Sumit Barua,
Understanding Group Gratuity Policy
Group Gratuity Policy is, in fact, a contract of insurance only between the Insurer, namely LIC, and the employer, even though the beneficiary is the employee covered by the policy. Therefore, the employee can demand the maximum sum of gratuity only as per the Payment of Gratuity Act, 1972, and not the maturity value of the insurance plan. If gratuity is not paid in accordance with the provisions of the PG Act or is delayed, the employee can proceed against both the employer and the Insurer. The insurer's liability is limited to the premium paid by the employer.
Components of Salary for Gratuity Calculation
If your salary structure comprises different components such as basic, dearness allowance, and other allowances, only the sum total of the last drawn basic and D.A. alone would be considered for the computation of your gratuity as per the Act upon termination of employment. This calculation is not based on the premium paid. If the dearness allowance component is absent in the wage structure, only the basic is to be taken into account. In the case where it is consolidated, the entire sum must be considered.
Filing a Claim for Gratuity
If the amount of gratuity paid by the employer through LIC is less than the amount stipulated by the Act, you have the right to file a claim under Section 7 of the Act with the Controlling Authority designated in the Act.