Gratuity Benefits for a Deceased Employee: How Do We Calculate and Settle the Claim?

How to calculate gratuity benefits for a death case?

Are there any criteria that need to be followed? To whom should the claim amount be settled?

We have a death case involving an employee who worked for 1 year and 3 months. The employee joined in August 2019 and passed away on December 22, 2020.

Please calculate and confirm the figure and guide us on how to proceed further.

Dear Raju-Gowda,

Based strictly on the provisions of Section 4 of the Payment of Gratuity Act, 1972, I am quite unable to understand and accept the answer given by our friend Alim Khan. I think that the Special Group Gratuity Insurance Policy covering the whole life up to 58 years of age of the insured employees on payment of additional premium would have come to his mind when he drafted his reply.

Gratuity Calculation for Death in Service

As per the first proviso to Subsection (1) of Section 4 of the PGA, 1972, only the minimum qualifying service of 5 years is not applicable to the case of an employee dying in harness within 5 years of service in the establishment. You can calculate and pay the gratuity to the deceased employee's nominee or legal heirs in the absence of nomination for the one-year service he actually rendered as per Section 4(2) of the Act. If your management is magnanimous, a more substantial amount can also be paid.

Procedure in Absence of Nomination

In the absence of nomination, it is always better to deposit the gratuity amount payable with the Controlling Authority under the Act for the area for disbursement under intimation to the legal heirs.