Gratuity Dilemma: How to Handle Payment for a Deceased Employee with No Nomination?

Request guidance on gratuity for an employee who has passed away during employment without a nomination and has two legal heirs. How should the gratuity be paid?

You should deposit the amount forthwith with the Controlling Authority under the PG Act, 1972 for the area within which your establishment is located, with an intimation to the claimants.

The Payment of Gratuity Act 1972

The Payment of Gratuity Act 1972 is a complete code in itself, and the Controlling Authority can determine the heirs and decide the payment to be made to each. The employer's liability is over once the amount is deposited with the authority.

Dear All,

I have a case related to the death of an employee.

The Company Details

The Company: Manufacturing Unit / Based in Uttar Pradesh, India
Employee Employment Nature: Seasonal (Confirmed) / On Roll
Entitled for Gratuity
FNF Made and Paid to Nominee immediately
Gratuity Payable through LIC

Nominee Situation

His spouse was the nominee, but after six months of her husband's death, she remarried and left the house. The late employee's father and mother are the only dependents if any benefits are to be given. Pension and EDLI Benefits through PF Authorities have not been processed as no one has turned back.

Gratuity Claim Issue

The Gratuity amount has now been received by the company, but the employee's father has asked to claim it by submitting an affidavit stating that he and his wife are the claimants. If the amount is given to his nominee, who has already remarried, she will not share anything. As dependents, they are in much need of the money.

Seniors' opinions are urgently required.

Dear Raj,

Remarriage and Terminal Benefits

Remarriage of a widow doesn't extinguish her right to receive the terminal benefits arising from her deceased former husband, as per the ratio decidendi established by the higher judiciary in various cases. You can search the internet to find a suitable one related to gratuity.

Claims of Surviving Parents

Regarding the claim of the surviving parents, it cannot be simply disregarded based solely on the nomination made by the employee earlier. Other factors such as the age of the parents, their socio-economic status, and financial support from other surviving children must be taken into account before determining whether they are entitled to a share of the gratuity payable to the deceased.

Therefore, a judicial decision is necessary after conducting an inquiry by the Controlling Authority under the PG Act, 1972. It is advisable to deposit the amount with the CA and request disbursement following an inquiry on this matter.

Thank you.

In this case, you should follow the prevailing conditions:

1. If there's a dispute between the heirs, send the Gratuity to the Controlling Authority/ALC.

2. If there's no dispute, ask the heirs to bring an indemnity bond signed by 2 permanent employees of your company and pay the heirs the Gratuity amount.