Hi all, I used to work for a company in India for 10 years and now I work for its UK subsidiary. Am I eligible for gratuity from the Indian HQ.
From United Kingdom, Surbiton
Acknowledge(0)
Amend(0)
From United Kingdom, Surbiton
Acknowledge(0)Amend(0)
Dear Siddhartha-Kothari ji, since your service is more than 5 years, you are certainly entitled to payment of gratuity when you leave your service. You mentioned that after working for 10 years, you are now working with the UK subsidiary of your company. Is your service transferred from the Indian company to the UK subsidiary, or is your service account settled at the Indian company, and you have been given a fresh appointment letter without acknowledging your past service? You need to check this. You should talk to your management. Where is your place of work? Your profile shows you are in the UK.
From India, Mumbai
Acknowledge(1)
Amend(0)
191From India, Mumbai
Acknowledge(1)Amend(0)
Hi Siddhartha, you also need to study your 'terms & conditions' of Indian posting and terms of settlement, if any, when you left India for the UK (subsidiary) and answer the above queries raised by Mr. Akil. How about your EPF and other terminal benefits, if any separation took place?
From India, Bangalore
Acknowledge(0)Amend(0)
From India, Bangalore
Acknowledge(0)Amend(0)
Understanding Gratuity Eligibility
Gratuity is a gratuitous payment, essentially a way of saying thank you for your services. Whether you have resigned from an Indian posting and received a separate appointment letter for the UK, or it is an internal transfer, when you return to India, you will be reabsorbed in your previous position. This needs to be clarified to determine your gratuity eligibility.
If you have permanently severed ties with your Indian posting, then you are eligible for gratuity as your service duration is over 5 years. However, if it is a transfer to the UK, you cannot claim gratuity for the time being.
From India, Mumbai
Acknowledge(0)Amend(0)
Gratuity is a gratuitous payment, essentially a way of saying thank you for your services. Whether you have resigned from an Indian posting and received a separate appointment letter for the UK, or it is an internal transfer, when you return to India, you will be reabsorbed in your previous position. This needs to be clarified to determine your gratuity eligibility.
If you have permanently severed ties with your Indian posting, then you are eligible for gratuity as your service duration is over 5 years. However, if it is a transfer to the UK, you cannot claim gratuity for the time being.
From India, Mumbai
Acknowledge(0)Amend(0)
Clarification on Gratuity Eligibility and Claim Process
Subject to receiving Siddartha's clarifications on his gratuity issue, there appear to be two scenarios:
i) He is yet to file his claim (subject to his eligibility concerning the separation of his service from the Indian company).
ii) Assuming he has already filed the claim and the Indian employer has yet to make his gratuity payment, provided the separation has been effected. When did his employment with the Indian company end?
The question remains whether he has still not filed his claim in the form and, if so, whether he is still eligible for payment of gratuity.
Yes, (in case his service has already separated) it's the duty of the Indian company to:
a) Calculate his eligible gratuity and issue a notice to him regarding the payment.
b) If a) above hasn't happened yet, the onus is on the Indian employer to settle his gratuity together with accrued interest until the date of payment.
c) Whether Siddartha's claim is barred by any limitation (assuming he has not yet filed his claim).
No Limitation to Claim Payment of Gratuity
The Payment of Gratuity Act does not prescribe any limitation to claim gratuity. Payment of gratuity is not a bounty to the employee by the employer. It is the right of an employee to claim gratuity, and the employee doesn't forfeit his claim to gratuity just because of a delayed claim. However, the employer cannot delay the disbursement of gratuity. The amount should be disbursed without delay within 30 days of the claim. Even if the claim is not received by the employer, they must calculate and issue a notice to the claimant.
It is the duty of the employer to pay gratuity within the stipulated period. In case the employee fails to claim, it is the duty of the employer to calculate and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority (and deposit the same with the Controlling Authority). Failure to do this results in the benefit of interest going to the employee.
In Case of Any Dispute
The starting point for payment of gratuity will be from the time when the employer disputes the liability. In Siddartha's case, there is no indication of any dispute existing.
The employer cannot resist the claim of payment of gratuity on the ground of limitation. No claim for gratuity shall be invalid merely because the claimant failed to present his application within the specified period (if any). The rule leaves no doubt that the Legislature intended that the claim or application for gratuity by an employee should not be defeated on technical grounds.
Payment of Gratuity Act, 1972: Section 7
Determination of the amount of gratuity:
1) A person who is eligible for payment of gratuity under this Act or any person authorized, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.
2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.
3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
3-A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such a rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification, specify.
4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity.
State-Specific Gratuity Rules
Some states have enacted Gratuity Rules in accordance with the Act to ensure that the payment of social security benefits is further secured for the employees, e.g., The Payment of Gratuity (Maharashtra) Rules, 1972.
Eligibility and Other Requirements
i) Any person employed on wages/salary.
4) An abstract of the Payment of Gratuity Act & Rules made thereunder is to be displayed as per Rule 20.
5) Compulsory insurance of the employees is to be obtained.
Compulsory Insurance
Section 4A: Every employer has to obtain insurance in the manner prescribed for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation of India established under the Life Insurance Corporation of India Act, 1956 (31 of 1956), or any other prescribed insurer.
Where an employer fails to make any payment by way of premium to the insurance referred to in sub-section (1) or by way of contribution to all approved gratuity funds referred to in sub-section (2), he shall be liable to pay the amount of gratuity due under this Act (including interest, if any, for delayed payments) forthwith to the controlling authority. Whoever contravenes the provisions of sub-section (5) shall be punishable with a fine which may extend to ten thousand rupees and, in the case of a continuing offense, with a further fine which may extend to one thousand rupees for each day during which the offense continues.
Determination of the Amount of Gratuity
Section 7: As soon as gratuity becomes payable, the employer shall determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined. A person who is eligible for payment of gratuity under this Act or any person authorized, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such a rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification, specify.
The Payment of Gratuity (Central) Rules, 1972
7. Application for gratuity:
1) An employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, ordinarily within thirty days from the date the gratuity became payable, in Form 'I' to the employer. Provided that where the date of superannuation or retirement of an employee is known, the employee may apply to the employer before thirty days of the date of superannuation or retirement.
5) An application for payment of gratuity filed after the expiry of the periods specified in this rule shall also be entertained by the employer if the applicant adduces sufficient cause for the delay in preferring his claim, and no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within the specified period. Any dispute in this regard shall be referred to the controlling authority for his decision.
Case Law Example
High Court of Judicature at Allahabad, Lucknow Bench
Court No.22 - Writ Petition No.2841 (M/S) of 2008
Organic Fertilizers ... Petitioner
Versus
Assistant Labour Commissioner (Controlling Authority) and another ... Opp. Parties
"A bare perusal of provisions of Section 7 of the Payment of Gratuity Act, 1972 reveals that the employer is under duty to prepare the gratuity and give notice in writing to the employee. Though the employee is also under obligation to submit the Form-I as prescribed, which requires certain information unless certain information as required is received by the employer, it is difficult for the employer to ascertain the facts and pay the gratuity as demanded. Overall, it is not disputed that after retirement, the gratuity is payable to the employee. Therefore, I hereby observe that the petitioner shall extend the benefit of the gratuity to the opposite party no.2 as per the order passed by the Prescribed Authority. So far as the interest is concerned, I do not find any error in the direction issued by the authorities concerned as only the direction has been issued to pay the interest w.e.f. the institution of the case till the date of decision. The petitioner shall pay the gratuity irrespective of the case pending before the Labour Court regarding the dispute of age of retirement. Learned counsel for the petitioner complains that even after the retirement, the respondent has retained the quarter without payment of rent, etc. Learned counsel for the opposite party no.2 undertakes that as soon as the gratuity along with interest is paid, the opposite party no.2 shall vacate the quarter, considering which, in the interest of justice, I hereby provide that as soon as the amount of gratuity along with interest is paid, the contesting respondent shall vacate the quarter forthwith. It is further provided that the petitioner shall be at liberty to deduct the amount of rent from the amounts which are payable against the gratuity."
So, it's up to Siddartha to act fast if the gratuity became "accrued & due".
From India, Bangalore
Acknowledge(0)Amend(0)
Subject to receiving Siddartha's clarifications on his gratuity issue, there appear to be two scenarios:
i) He is yet to file his claim (subject to his eligibility concerning the separation of his service from the Indian company).
ii) Assuming he has already filed the claim and the Indian employer has yet to make his gratuity payment, provided the separation has been effected. When did his employment with the Indian company end?
The question remains whether he has still not filed his claim in the form and, if so, whether he is still eligible for payment of gratuity.
Yes, (in case his service has already separated) it's the duty of the Indian company to:
a) Calculate his eligible gratuity and issue a notice to him regarding the payment.
b) If a) above hasn't happened yet, the onus is on the Indian employer to settle his gratuity together with accrued interest until the date of payment.
c) Whether Siddartha's claim is barred by any limitation (assuming he has not yet filed his claim).
No Limitation to Claim Payment of Gratuity
The Payment of Gratuity Act does not prescribe any limitation to claim gratuity. Payment of gratuity is not a bounty to the employee by the employer. It is the right of an employee to claim gratuity, and the employee doesn't forfeit his claim to gratuity just because of a delayed claim. However, the employer cannot delay the disbursement of gratuity. The amount should be disbursed without delay within 30 days of the claim. Even if the claim is not received by the employer, they must calculate and issue a notice to the claimant.
It is the duty of the employer to pay gratuity within the stipulated period. In case the employee fails to claim, it is the duty of the employer to calculate and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority (and deposit the same with the Controlling Authority). Failure to do this results in the benefit of interest going to the employee.
In Case of Any Dispute
The starting point for payment of gratuity will be from the time when the employer disputes the liability. In Siddartha's case, there is no indication of any dispute existing.
The employer cannot resist the claim of payment of gratuity on the ground of limitation. No claim for gratuity shall be invalid merely because the claimant failed to present his application within the specified period (if any). The rule leaves no doubt that the Legislature intended that the claim or application for gratuity by an employee should not be defeated on technical grounds.
Payment of Gratuity Act, 1972: Section 7
Determination of the amount of gratuity:
1) A person who is eligible for payment of gratuity under this Act or any person authorized, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.
2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.
3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
3-A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such a rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification, specify.
4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity.
State-Specific Gratuity Rules
Some states have enacted Gratuity Rules in accordance with the Act to ensure that the payment of social security benefits is further secured for the employees, e.g., The Payment of Gratuity (Maharashtra) Rules, 1972.
Eligibility and Other Requirements
i) Any person employed on wages/salary.
4) An abstract of the Payment of Gratuity Act & Rules made thereunder is to be displayed as per Rule 20.
5) Compulsory insurance of the employees is to be obtained.
Compulsory Insurance
Section 4A: Every employer has to obtain insurance in the manner prescribed for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation of India established under the Life Insurance Corporation of India Act, 1956 (31 of 1956), or any other prescribed insurer.
Where an employer fails to make any payment by way of premium to the insurance referred to in sub-section (1) or by way of contribution to all approved gratuity funds referred to in sub-section (2), he shall be liable to pay the amount of gratuity due under this Act (including interest, if any, for delayed payments) forthwith to the controlling authority. Whoever contravenes the provisions of sub-section (5) shall be punishable with a fine which may extend to ten thousand rupees and, in the case of a continuing offense, with a further fine which may extend to one thousand rupees for each day during which the offense continues.
Determination of the Amount of Gratuity
Section 7: As soon as gratuity becomes payable, the employer shall determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined. A person who is eligible for payment of gratuity under this Act or any person authorized, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such a rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification, specify.
The Payment of Gratuity (Central) Rules, 1972
7. Application for gratuity:
1) An employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, ordinarily within thirty days from the date the gratuity became payable, in Form 'I' to the employer. Provided that where the date of superannuation or retirement of an employee is known, the employee may apply to the employer before thirty days of the date of superannuation or retirement.
5) An application for payment of gratuity filed after the expiry of the periods specified in this rule shall also be entertained by the employer if the applicant adduces sufficient cause for the delay in preferring his claim, and no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within the specified period. Any dispute in this regard shall be referred to the controlling authority for his decision.
Case Law Example
High Court of Judicature at Allahabad, Lucknow Bench
Court No.22 - Writ Petition No.2841 (M/S) of 2008
Organic Fertilizers ... Petitioner
Versus
Assistant Labour Commissioner (Controlling Authority) and another ... Opp. Parties
"A bare perusal of provisions of Section 7 of the Payment of Gratuity Act, 1972 reveals that the employer is under duty to prepare the gratuity and give notice in writing to the employee. Though the employee is also under obligation to submit the Form-I as prescribed, which requires certain information unless certain information as required is received by the employer, it is difficult for the employer to ascertain the facts and pay the gratuity as demanded. Overall, it is not disputed that after retirement, the gratuity is payable to the employee. Therefore, I hereby observe that the petitioner shall extend the benefit of the gratuity to the opposite party no.2 as per the order passed by the Prescribed Authority. So far as the interest is concerned, I do not find any error in the direction issued by the authorities concerned as only the direction has been issued to pay the interest w.e.f. the institution of the case till the date of decision. The petitioner shall pay the gratuity irrespective of the case pending before the Labour Court regarding the dispute of age of retirement. Learned counsel for the petitioner complains that even after the retirement, the respondent has retained the quarter without payment of rent, etc. Learned counsel for the opposite party no.2 undertakes that as soon as the gratuity along with interest is paid, the opposite party no.2 shall vacate the quarter, considering which, in the interest of justice, I hereby provide that as soon as the amount of gratuity along with interest is paid, the contesting respondent shall vacate the quarter forthwith. It is further provided that the petitioner shall be at liberty to deduct the amount of rent from the amounts which are payable against the gratuity."
So, it's up to Siddartha to act fast if the gratuity became "accrued & due".
From India, Bangalore
Acknowledge(0)Amend(0)
The responses of the learned colleagues are based on assumptions as the poster has not clearly stated whether his services in India came to an end and whether he joined the subsidiary in the UK as a fresh employee or on transfer with continuity of service. He needs to clarify the relevant terms of his appointment in the UK subsidiary as well as in India.
On receiving this clarification, one can answer his query more appropriately.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
Acknowledge(1)
Amend(0)
On receiving this clarification, one can answer his query more appropriately.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
Acknowledge(1)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Making the Most of Work Experience.doc