Gratuity payment
1 month ago
Hi Team, I am working in a MNC pharma company since last 4 years and 9 months (continuous service). Due to re-organization, the company is planning to release me from the company within 1 month. I have checked their gratuity policy, where it mentions that payment of gratuity will be done as per Payment of Gratuity Act, 1972. So, based on this situation I will be released from the company serving 4 years and 10 months (even though my official notice period is 90 days). My query is whether I will get gratuity in this case? And whether company can be enforce to pay gratuity as its their decision to release early else my 5 years of service would have been completed. Thank you.
A.Dear Client,
With the enactment of the Payment of Gratuity Act, 1972, gratuity payment has become mandatory for the establishment where it is applicable. A gratuity must be paid to an employee upon cessation of employment if he or she has rendered continuous service for five years or more, according to Section 4(1) of the Payment of Gratuity Act of 1972. Section 4(2) of the Act provides that for every completed year of service or part thereof in excess of 6 months, the employer shall pay gratuity to an employee at the prescribed rates. According to section 2A of the Act, an employee is said to be in continuous service for a period if he has for that period been in uninterrupted service including service which may be interrupted on account of accident, sickness, leave, absence from duty without leave, layoff, strike or a lock-out or cessation of work not due to any fault of employee. The Madras High Court in Salem Textile Case had held that an employee who has completed 4 years and 240 days is eligible for gratuity. In view of the above proposition of law and averment of Court, when you rendered uninterrupted and continuous service for 4 yrs 9 months in an establishment, you are eligible for payment of gratuity payable by your employer as per the provision of the Payment of Gratuity Act. The Gratuity Benefits are calculated using the following formula:-(15/26) multiplied by (No of Completed Years on Exit) multiplied by (Terminal Wages/Salary). Under Rule 7(1) of the Payment of Gratuity Rules, 1972, 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, within thirty days from the date the gratuity became payable, in Form 'I' to the employer who is duty bound to disburse the gratuity within 30 days of cessation of employment of employee or claim made by an employee. After the completion of 30 days, the employer has to pay you not only the gratuity amount but also the simple interest accrued for the delay in payment of the gratuity. In case of denial of gratuity by the employer, reach out to the office of the concerned Labour Commissioner and the Controlling Authority under the Act to file a complaint against the employer over non-payment of gratuity.
With the enactment of the Payment of Gratuity Act, 1972, gratuity payment has become mandatory for the establishment where it is applicable. A gratuity must be paid to an employee upon cessation of employment if he or she has rendered continuous service for five years or more, according to Section 4(1) of the Payment of Gratuity Act of 1972. Section 4(2) of the Act provides that for every completed year of service or part thereof in excess of 6 months, the employer shall pay gratuity to an employee at the prescribed rates. According to section 2A of the Act, an employee is said to be in continuous service for a period if he has for that period been in uninterrupted service including service which may be interrupted on account of accident, sickness, leave, absence from duty without leave, layoff, strike or a lock-out or cessation of work not due to any fault of employee. The Madras High Court in Salem Textile Case had held that an employee who has completed 4 years and 240 days is eligible for gratuity. In view of the above proposition of law and averment of Court, when you rendered uninterrupted and continuous service for 4 yrs 9 months in an establishment, you are eligible for payment of gratuity payable by your employer as per the provision of the Payment of Gratuity Act. The Gratuity Benefits are calculated using the following formula:-(15/26) multiplied by (No of Completed Years on Exit) multiplied by (Terminal Wages/Salary). Under Rule 7(1) of the Payment of Gratuity Rules, 1972, 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, within thirty days from the date the gratuity became payable, in Form 'I' to the employer who is duty bound to disburse the gratuity within 30 days of cessation of employment of employee or claim made by an employee. After the completion of 30 days, the employer has to pay you not only the gratuity amount but also the simple interest accrued for the delay in payment of the gratuity. In case of denial of gratuity by the employer, reach out to the office of the concerned Labour Commissioner and the Controlling Authority under the Act to file a complaint against the employer over non-payment of gratuity.
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