How to Handle Gratuity for an Employee Who Has Absconded? Seeking Advice

Dear Professionals,

Greetings of the day.

Query regarding Gratuity

One employee is eligible for gratuity, but without information, the employee absconded (not able to trace out). Consequently, we are unable to proceed with the Full and Final (F&F) settlement. According to the Gratuity Act, the employer is mandated to arrange the payment of gratuity within thirty days from the date it becomes payable to the entitled person.

Could you please suggest the procedure to be followed as per the Act? Is there any provision to retain this amount within the organization?

You may take action and deposit the amount with the Controlling Authority under the Gratuity Act.

Refer to this discussion: https://www.citehr.com/628892-paymen...ml#post2465375

Gratuity

Before we draw the gratuity payment criteria for absconded employees, we should clarify whether an absconded employee is eligible for it or not.

According to the Payment of Gratuity Act (1972), the gratuity rules clearly mention that if an employee has completed more than five years of continuous service, they are eligible for both gratuity and leave encashment.

Employee's Right to Gratuity

The Gratuity Act identifies the right of an employee to claim gratuity, leaving no discretion for an employer to delay payment of gratuity dues to an employee. It must be mandatorily paid. The Act involves the concerned employer. Any negligence in paying gratuity dues is punishable by imprisonment for not less than six months, extendable up to two years.

In short, there might be a few exceptional cases, but the Act provides no provision to retain the gratuity amount within the organization.