Interest on Delayed payment of Gratuity

Dear Client,
An organization/establishment with a workforce of 10 persons and above is liable to pay gratuity under the Payment of Gratuity Act 1972. According to Section 4(1) of the Payment of Gratuity Act of 1972, a gratuity shall be paid to an employee upon cessation of employment regardless of reasons, if he or she has rendered continuous service for five years or more in the establishment. The gratuity payable by an employer to an eligible employee is the subject matter governed by the Payment of Gratuity Act, 1972 and as regards non-payment of gratuity by the employer, the aggrieved employee should approach the Controlling Authority and the Asst. Labour Commissioner appointed under the Act to try the disputes related to payment of gratuity because the Payment of Gratuity Act, 1972 is a comprehensive and exclusive law that governs the payment of gratuity and disputes related to gratuity claims. Accordingly, for non-payment of gratuity, serving a legal notice to the Company, you can escalate your claim following the provision of sub-section 3A of Section 7 of the Payment of Gratuity Act, 1972 before the concerned Asst. Labour Commissioner and the Controlling Authority under the Act. Under Sub-Sec. 5 of Section 7 of the Act, the Controlling Authority is empowered under the Code of Civil Procedure, 1908, to try the claim of the applicant and pass an order on the claim petition directing the employer/company for payment of gratuity to an eligible employee. Section 8 of the Payment of Gratuity Act, 1972, deals with the recovery of unpaid gratuity and states that if the amount of gratuity payable under this Act is not paid by the employer, within the prescribe time, to the person entitled thereto, the Controlling Authority and the Asst. Labour Commissioner shall, on an application made to it in this behalf by the aggrieved person, try the claim and based on the merit in the claim pass an order under Section 17 of the Act directing the employer for payment of gratuity to the eligible employee. If the employer files an appeal against the said order to the Appellate Authority and the Dy. Labour Commissioner or fails to implement the order of the Controlling Authority, on the application to be filed by the aggrieved employee under Section 19 of the Act, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto. So, while the employer is liable to pay interest on the unpaid gratuity till the date of deposit of the gratuity amount with the Controlling Authority, they are liable to pay further interest based on the final order passed by the Appellate Authority. Given the proposition of relevant law, to implement the order for payment of gratuity, you should approach the Controlling Authority, who then following the final order, if any, passed by the Appellate Authority, issue direction for execution of the said order to the Collector following the provision of Section 8 of the Act. If required, consult with an Advocate specialising in gratuity claims or visit the office concerned Controlling Authority and the Asst. Labour Commissioner to understand your rights and remedies to navigate the issue effectively.

Dear Sir,

Yes, you can (and should) file a claim before the Assistant Labour Commissioner (the “Controlling Authority”) in Bathinda under the Payment of Gratuity Act, 1972 for recovery of gratuity and interest for delayed payment. At the same time you should preserve alternate remedies (civil recovery / writ) because State Human Rights Commission (SHRC) orders have a mixed enforcement record and may not always be directly executable against a private employer.