Is It Worth Fighting for Gratuity After 4 Years and 310 Days in a PSU? Seeking Advice

Dear All, I worked in CPSE/PSU HIL from 19.10.2016 to 23.08.2021 under the management cadre, where I was responsible for state business. My total service tenure was 4 years and 310 days. In my company, we had over 400 employees, with 80 under the management cadre. However, HR is now refusing to pay the gratuity, citing the Gratuity Rule of 1972 and CPSE/PSU guidelines, which require a minimum of 5 years of service. As I have switched to a job in the private industry, the gratuity cannot be transferred. The amount in question is approximately 1.90 lakh, which is significant for me. Should I file a case or let it go? Please advise.

Dear Suryakanth,

It is well settled, as per the ratio decidendi of the judgment of the Madras High Court in Mettur Beardsell Ltd v Central Appellate Authority under the PG Act, that if an employee has completed 240 days of continuous service in the fifth year, they are eligible to claim gratuity.

Therefore, if the service details provided in your post are correct, then the contention of your HR cannot be accepted. No guidelines of an organization can run counter to any judicial precedent laid down on the same issue.

Gratuity for a particular spell of accrued service in one organization cannot be transferred to another upon the exit of the employee unless there is a bilateral agreement between the organizations and the exit is a transfer of service.

Try to explain the above legal position to the HR. Still, if they hold on to their stand and you are denied gratuity, file a claim for gratuity with interest and costs before the Controlling Authority under the PG Act, 1972, where the previous establishment is situated.

Thank you for your valuable suggestion. In this regard, I have already shared the judgment of the Madras High Court. However, HR is saying that it is applicable in the case of workmen but not applicable in the case of management staff. Is that correct, or does he lack sufficient knowledge? Kindly guide me on what action I should take now.

Thanks

Dear Sir, there is no such distinction between worker and manager in the PG Act. It defines only 'employee'. It appears that the organization wishes to avoid liability. In such a case, you may approach the authority as suggested.

Dear Colleague,

As briefed by our colleagues, under the circumstances that despite your repeated representation, if your organization is still not open to understanding and settling your gratuity:

Step 1: Request HR to discuss with the Local Controlling Authority

Request your HR to discuss with the Local Controlling Authority under the Payment of Gratuity (Deputy Commissioner of Labour - Controlling Authority appointed under the Payment of Gratuity Act 1972) for clarity on the legal stand.

Step 2: Meet the Controlling Authority if necessary

If they are unwilling to discuss with the mentioned Authority, then you should meet the Controlling Authority under the Payment of Gratuity - Deputy Commissioner of Labour (Controlling Authority appointed under the Payment of Gratuity Act 1972) and present your side. Normally, they will contact HR to resolve the issue.

Further, if necessary, based on merits, the Authority may request you to file forms under the Act and conduct an official hearing to determine if the management should pay gratuity if they are satisfied that you are eligible under the law.

All the best, God bless.

Dr. P. Sivakumar
Doctor Siva Global HR
Tamil Nadu

Dear Suryakant, what your HR is saying is a fact because you have not completed five years of service. The Madras High Court judgment is case-specific, so it cannot be a wholesome rule.

Claiming Your Gratuity

To claim your gratuity, you should lodge a complaint before the controlling authority for non-payment of gratuity by your employer. In another scenario, you can file a case in the Odisha High Court for the same.

Eligibility for Gratuity

It's true, as per the judgment of the Madras High Court, if an employee has completed 4 years and 240 days, they are eligible for gratuity. This rule applies to all employees, whether they are staff or workers.