Whether to pay Gratuity for the period during which the employee was present on duty but did not perform any work and is not paid wages on the principle of NO WORK NO WAGES, which is upheld by court?

One of our workmen joined our company in the year 1980 and retired in the year 2018. He did not work during the period 2015-18, though he was coming to duties. He was simply sitting and going back. He did not heed the instructions of his superiors to work. The same was recorded in the log books of the respective section also.

He was not paid any wages for that period on the principle of NO WORK NO PAY. He approached the court, and the court also ruled in favor of the company by upholding the action of the company in not paying the wages on the principle of NO WORK NO PAY.

Now the question is:

1. Whether to pay gratuity for the period from 2015 to 2018 during which he did not work though reported to duties and was not paid any wages.
2. Whether that period is said to be a continuous service under Section 2A of the Payment of Gratuity Act 1972.

I request my colleagues to advise on the above queries.

Dear,

On the above query, kindly let me know:
1. Did he get the salary slip for the year 2015-2018?
2. If yes, then what have you written on present days?

For more clarification, do not hesitate to contact me via phone.

The whole matter can be resolved by careful reading of Sec 2A and 4 of the Payment of Gratuity Act 1972.

Here, with the brief facts mentioned in the query, the individual is entitled to gratuity even for the period of no pay, no work.

When the employee was reporting for work but did no work, a show-cause notice should have been given, and disciplinary action taken.

It is my opinion that he is entitled to gratuity for the period of no work, as stated by the company.

Dear Sir,

Greetings!

Enclosed herewith is an explanatory circular from the Food Corporation of India for their employees to address and prevent any potential issues. Hopefully, this will help resolve the problem.

Thank you.

Dear colleague,

The company should have gone on record to convey to the worker, after the court order upholding his absence on a no-work, no-pay basis, that his service for that period is treated as a break in service and will not be counted as continuous service for the purpose of gratuity. It would have strengthened the stance of treating that period as a break in service and making it a disqualification for receiving gratuity for that period. In the absence of such a record, it is disputable to treat that period as a disqualification to receive gratuity.

Regards,
Vinayak Nagarkar
HR Consultant

I am just wondering under what circumstances a workman could be on the rolls of the company during the period 2015-18, even though he was reporting for duty but was simply sitting idle and then going back. What was recorded in the attendance register so far? How was his presence accounted for in all returns and registers under various Acts/Rules?

Dear colleague,

As per the information provided by you, the workman is not entitled to gratuity under the condition of a service break. However, he is eligible as your establishment did not terminate him on the grounds of long absence and allowed him to retire upon attaining the required age.

Overall, he is not eligible due to a three-year break in service as he has not maintained regular attendance. The workman can be denied gratuity based on this break in service. The individual may choose to seek legal recourse in this matter.

Please let me know if you need further assistance or clarification.

Thank you.

Dear Mr. Kumar,
I fully agree with the views of Mr. Nathrao. The gratuity to an employee is made based on the ‘continuous service’ rendered by him. This continuity of service is calculated keeping in view the provision of Section 2A of the Payment of Gratuity Act, 1972. According to this section, an employee renders uninterrupted service even if his service is interrupted by sickness, accident, absence from duty with or without leave, lay-off, strike, or lock-out or cessation of work not due to the fault of the employee.
However, an order has been passed by the management in accordance with the Standing Orders, rules or regulations governing the employee of the establishment, treating his absence as break in service, then the period covered under such order shall not be countable towards his continuous service and thus, such period shall be liable to be deducted from his total service period.
As per the facts stated by you in the opening paragraph of your query, he was liable to disciplinary action for not carrying out the work as per the directions of his superiors. Even an order of ‘No Work No Wages’ was passed against him the court. However, the management failed to issue an order in writing regarding his break in service. Therefore, his service would be countable and his gratuity would be payable to him till 2018 as per the provisions laid down in section 2A of the Payment of Gratuity Act, 1972.
Best wishes and regards.

Dear Sir,

I have just joined a partnership firm as an HR executive. The management of the firm now wants to implement gratuity for their employees and asked me how to effect the same from this month. Please guide.

Ashok

I fully agree with the perspective of Mr. Jpratap.

Dear Anonymous from Cuttack,

I suggest that you take out an insurance policy for gratuity coverage from an insurance company. Obtain quotes from various companies and select the best one among them. A thorough study of the Payment of Gratuity Act and its rules will be beneficial.

Thank you.

Hi, I am working for a Gurgaon-based company for the last 12 years. They have not registered under the Gratuity Act, even though there are 500 employees working in the organization. Now, the company is taking an undertaking letter, stating not to claim gratuity in the future. They have insisted that I sign the letter. Finally, I have signed a copy and submitted it. In the future, if I file a case, can I receive the overall year's gratuity amount? I have attached the letter.

Hi,

This is not legally correct.

According to the Gratuity Act 1972, an employee is eligible to receive a gratuity amount after completing five years of continuous service at one organization. The gratuity amount is paid to the employees once they retire, resign, or are laid off, and the employer cannot claim that it was already paid on a monthly basis. Even if a letter of undertaking is forcibly collected from the employee, it will not be valid. Also, gratuity should be calculated from the effective date of joining.

This letter will not be valid even if it is signed by the employee.