Respected all,
We have a Long-Term Settlement with the Union for providing loans, which includes a clause for the recovery of any outstanding amounts at the time of separation against the Gratuity payable to the individual.
Is this legal? What could be the consequences?
Please provide your valuable input on this.
Thank you,
Sameer
From India, Ahmadabad
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We have a Long-Term Settlement with the Union for providing loans, which includes a clause for the recovery of any outstanding amounts at the time of separation against the Gratuity payable to the individual.
Is this legal? What could be the consequences?
Please provide your valuable input on this.
Thank you,
Sameer
From India, Ahmadabad
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Dear Mahajan, As per my knowledge it is legal we can deduct outstanding amount from gratuity. Regard’s Shaikh
From India, Bhubaneswar
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138From India, Bhubaneswar
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It is legal to get Form V (under the Payment of Gratuity Act, 1972) filled in by the employee at the time of giving a loan. Also, obtain a request letter from the employee stating that in case of failure to pay back the loan due to any unforeseen circumstances in the future, the balance amount may be deducted from the gratuity payable to them.
We have successfully implemented this practice in our organization for the last 25 years. Additionally, we have a very strong union, and this clause is common in all our agreements throughout the years.
From India, Nagpur
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We have successfully implemented this practice in our organization for the last 25 years. Additionally, we have a very strong union, and this clause is common in all our agreements throughout the years.
From India, Nagpur
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Dear Sameer,
Irrespective of whether or not you have entered into any agreement with the management, any outstanding amount or overpaid amount can be recovered from the amount of gratuity. On the other hand, no outstanding or overpaid amount can be recovered from the Pension or Provident Fund, except that only the overpaid pension amount is recoverable from the monthly pension due to any employee. There is no rule that prohibits any outstanding amount from recovery from gratuity, being a statutory benefit.
PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi
09968076381
dcgroup1962@gmail.com
From India, Delhi
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Irrespective of whether or not you have entered into any agreement with the management, any outstanding amount or overpaid amount can be recovered from the amount of gratuity. On the other hand, no outstanding or overpaid amount can be recovered from the Pension or Provident Fund, except that only the overpaid pension amount is recoverable from the monthly pension due to any employee. There is no rule that prohibits any outstanding amount from recovery from gratuity, being a statutory benefit.
PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi
09968076381
dcgroup1962@gmail.com
From India, Delhi
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Dear Sam,
Let us take situations and try to find out the answer to your query:
Situation 1:
The amount outstanding is very high, the person is not in the good books of management, and has left the organization without full and final settlement. He does not seem to be willing to settle the amount.
Answer: In such a situation, you can definitely recover the amount from his gratuity and settle the remaining amount.
Situation 2:
The amount outstanding is considerably high, the person is still willing to settle the amount but does not have funds.
Process his gratuity, subject to payable by cheque. Once you get his gratuity cheque, you can ask the employee to come to the office, take a PDC (Post Dated Cheque) from that employee against the gratuity payment, and settle the amount.
Situation 2 is more practical and does not create a bad impression about the company, but again, it is risky.
Just in case if the cheque given is not realized, the company retains all rights to file a case.
Regards,
Anjali Kishor Limaye
From India, Mumbai
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Let us take situations and try to find out the answer to your query:
Situation 1:
The amount outstanding is very high, the person is not in the good books of management, and has left the organization without full and final settlement. He does not seem to be willing to settle the amount.
Answer: In such a situation, you can definitely recover the amount from his gratuity and settle the remaining amount.
Situation 2:
The amount outstanding is considerably high, the person is still willing to settle the amount but does not have funds.
Process his gratuity, subject to payable by cheque. Once you get his gratuity cheque, you can ask the employee to come to the office, take a PDC (Post Dated Cheque) from that employee against the gratuity payment, and settle the amount.
Situation 2 is more practical and does not create a bad impression about the company, but again, it is risky.
Just in case if the cheque given is not realized, the company retains all rights to file a case.
Regards,
Anjali Kishor Limaye
From India, Mumbai
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In view of the fact that the recovery of outstanding amounts can be obtained from Gratuity at the time of separation and has been incorporated into your long-term agreement with the employees, you could proceed with implementing the same. However, it would be prudent to have a separate written individual undertaking with the concerned individuals at the time of disbursal of loans, etc., to address such eventualities.
Vasant Nair
From India, Mumbai
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Vasant Nair
From India, Mumbai
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Gratuity becomes payable only when the service rendered is satisfactory. Otherwise, it is not payable. In this case, when the concerned employee has defaulted on his obligations to pay back, no gratuity should be payable in the first instance. If there is no earning under the heading "Gratuity", where is the question of any recovery.
Thanks & Best Wishes,
Harsh Kumar Sharan (XLRI Alumnus)
Director & Head - Executive Coaching & Training
Kritarth Consulting Private Limited
New Delhi
Email: hksharan@kritarth.com
From India, Delhi
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Thanks & Best Wishes,
Harsh Kumar Sharan (XLRI Alumnus)
Director & Head - Executive Coaching & Training
Kritarth Consulting Private Limited
New Delhi
Email: hksharan@kritarth.com
From India, Delhi
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Not repaying the loan does not amount to unsatisfactory service. Furthermore, as per the Gratuity Act, unsatisfactory service is not the criterion for forfeiture of gratuity. The gratuity can only be forfeited in cases of:
1) riotous, violent, or disorderly behavior
2) moral turpitude.
However, both of these misconducts must be proven through a domestic enquiry. Even if you are aware that the employee has committed these misconducts, and there are multiple witnesses, one cannot consider touching the employee's gratuity amount.
From India, Nagpur
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1) riotous, violent, or disorderly behavior
2) moral turpitude.
However, both of these misconducts must be proven through a domestic enquiry. Even if you are aware that the employee has committed these misconducts, and there are multiple witnesses, one cannot consider touching the employee's gratuity amount.
From India, Nagpur
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There is a clear provision under the Payment of Gratuity Act. Here, I would like to mention section 13 of the Act, which provides protection to Gratuity. This section enumerates the principle that the gratuity of an employee cannot be attached under any decree by court or any kind of payment, even for the recovery of a loan provided to the employees.
It has been held in a case titled Yada Laxmi vs. A.P State Corporation Bank, LLR 2006 (108), that the amount of gratuity is not liable to be adjusted towards any amount drawn by the employee as a personal loan or housing loan.
The Delhi High Court held in a case titled Taxmaco Ltd vs. Roshan Singh 2001 LLR 890 (Delhi) that, in view of the direct and categorical judgment of the Supreme Court of India, the Payment of Gratuity Act is a welfare piece of legislation, and the amount of payment of gratuity cannot be withheld from an employee even on non-vacation of company quarters.
Withholding or adjustment of gratuity is not permissible under any circumstance other than those mentioned in section 4(6) of the Act, as held by the Kerala High Court in a case titled K.C Methew vs. Plantation Corporation Kerala LLR 2001 (123).
I hope the above clears all doubts of the members who wrongly gave opinions without considering the provisions of the law.
For more information, feel free to write further.
Regards
From India, Delhi
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It has been held in a case titled Yada Laxmi vs. A.P State Corporation Bank, LLR 2006 (108), that the amount of gratuity is not liable to be adjusted towards any amount drawn by the employee as a personal loan or housing loan.
The Delhi High Court held in a case titled Taxmaco Ltd vs. Roshan Singh 2001 LLR 890 (Delhi) that, in view of the direct and categorical judgment of the Supreme Court of India, the Payment of Gratuity Act is a welfare piece of legislation, and the amount of payment of gratuity cannot be withheld from an employee even on non-vacation of company quarters.
Withholding or adjustment of gratuity is not permissible under any circumstance other than those mentioned in section 4(6) of the Act, as held by the Kerala High Court in a case titled K.C Methew vs. Plantation Corporation Kerala LLR 2001 (123).
I hope the above clears all doubts of the members who wrongly gave opinions without considering the provisions of the law.
For more information, feel free to write further.
Regards
From India, Delhi
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Gratuity cannot be adjusted against any amount. The actual amount of gratuity payable shall be paid to the employee by means of a cheque. In case any loan is payable by the employee, it shall be collected by means of a separate cheque or cash from the employee while giving the gratuity cheque to the employee. This is required to safeguard the Management from unwanted litigation in the event of the employee or his legal heirs filing a gratuity claim before the Gratuity Authority at a later period.
I fully agree with what Mr. essykkr. Regards.
From India, Selam
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I fully agree with what Mr. essykkr. Regards.
From India, Selam
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No deduction can be made from gratuity as it is a social security benefit for the employee.
The amount towards gratuity shall stand protected under Section 13 of the Act.
Section 13: Protection of Gratuity
No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop exempted under Section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue, or criminal court.
Also, please refer to Section 4(6).
Section 4(6): Notwithstanding anything contained in sub-section (1),
(a) the gratuity of an employee, whose services have been terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss caused;
(b) the gratuity payable to an employee may be wholly or partially forfeited—
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
The speaking order with reasons stated in Section 4(6) to forfeit the gratuity to the extent of the damage is a must following due process of natural justice.
From India, Ahmadabad
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The amount towards gratuity shall stand protected under Section 13 of the Act.
Section 13: Protection of Gratuity
No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop exempted under Section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue, or criminal court.
Also, please refer to Section 4(6).
Section 4(6): Notwithstanding anything contained in sub-section (1),
(a) the gratuity of an employee, whose services have been terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss caused;
(b) the gratuity payable to an employee may be wholly or partially forfeited—
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
The speaking order with reasons stated in Section 4(6) to forfeit the gratuity to the extent of the damage is a must following due process of natural justice.
From India, Ahmadabad
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This is not a very correct understanding of Gratuity. There is no qualifying criteria of "service rendered is satisfactory" for payment for Gratuity.
If one meets the qualifying criteria stipulated in the Act, one becomes eligible for payment of Gratuity.
Best Wishes,
Vasant Nair
Gratuity becomes payable only when the service rendered is satisfactory. Otherwise, it is not payable. In this case, when the concerned employee has defaulted on his obligations to pay back, no gratuity should be payable in the first instance. If there is no earning under the heading "Gratuity", where is the question of any recovery.
Thanks & Best Wishes,
Harsh Kumar Sharan (XLRI Alumnus) Director & Head - Executive Coaching & Training Kritarth Consulting Private Limited New Delhi Email: hksharan@kritarth.com
From India, Mumbai
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If one meets the qualifying criteria stipulated in the Act, one becomes eligible for payment of Gratuity.
Best Wishes,
Vasant Nair
Gratuity becomes payable only when the service rendered is satisfactory. Otherwise, it is not payable. In this case, when the concerned employee has defaulted on his obligations to pay back, no gratuity should be payable in the first instance. If there is no earning under the heading "Gratuity", where is the question of any recovery.
Thanks & Best Wishes,
Harsh Kumar Sharan (XLRI Alumnus) Director & Head - Executive Coaching & Training Kritarth Consulting Private Limited New Delhi Email: hksharan@kritarth.com
From India, Mumbai
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Dear essykkr,
I must point out that your opinion is quite misleading for the members of this forum. You have not only misinterpreted the provisions of Section 13 of the Payment of Gratuity Act but also misquoted the Case Laws. Therefore, I urge you to review your reply by rereading the provisions of Section 13, which protect from attachment by any court of law but do not specify that the loss to the employer may not be adjusted out of the gratuity amount. Making unauthorized additions or alterations in the Statutory Laws is not advisable.
I am including the extract of Section 13 below for everyone's information:
EXTRACT of SECTION 13
13. PROTECTION OF GRATUITY. - No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop exempted under section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue, or criminal court.
As you can see, there is no mention of the word "LOAN" in the said Section.
Furthermore, the case law "Yada Laxmi V/s A.P State Corporation Bank, LLR 2006 (106)", as quoted by you, pertains only to the deceased employee, not any other retiring, resigning, or terminated employee. It is important to note that a particular case law applies to individual cases and does not become universal law unless a competent court of law specifically agrees to apply it to any other particular case after its satisfaction.
It is essential to clarify that this is not a case of withholding gratuity by the employer. It concerns the payment of gratuity after the adjustment of the balance of the loan amount. Therefore, the case laws you referenced are irrelevant in this specific case.
For your information, the Payment of Gratuity Act clearly provides for the forfeiture of an employee's gratuity by the employer for any loss or damage caused to the employer, and Section 13 does not operate in that case.
I recommend you to review your reply by thoroughly reading the Payment of Gratuity Act as well as the case laws in their entirety as reading between the lines can be misleading.
Regards
From India, Delhi
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I must point out that your opinion is quite misleading for the members of this forum. You have not only misinterpreted the provisions of Section 13 of the Payment of Gratuity Act but also misquoted the Case Laws. Therefore, I urge you to review your reply by rereading the provisions of Section 13, which protect from attachment by any court of law but do not specify that the loss to the employer may not be adjusted out of the gratuity amount. Making unauthorized additions or alterations in the Statutory Laws is not advisable.
I am including the extract of Section 13 below for everyone's information:
EXTRACT of SECTION 13
13. PROTECTION OF GRATUITY. - No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop exempted under section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue, or criminal court.
As you can see, there is no mention of the word "LOAN" in the said Section.
Furthermore, the case law "Yada Laxmi V/s A.P State Corporation Bank, LLR 2006 (106)", as quoted by you, pertains only to the deceased employee, not any other retiring, resigning, or terminated employee. It is important to note that a particular case law applies to individual cases and does not become universal law unless a competent court of law specifically agrees to apply it to any other particular case after its satisfaction.
It is essential to clarify that this is not a case of withholding gratuity by the employer. It concerns the payment of gratuity after the adjustment of the balance of the loan amount. Therefore, the case laws you referenced are irrelevant in this specific case.
For your information, the Payment of Gratuity Act clearly provides for the forfeiture of an employee's gratuity by the employer for any loss or damage caused to the employer, and Section 13 does not operate in that case.
I recommend you to review your reply by thoroughly reading the Payment of Gratuity Act as well as the case laws in their entirety as reading between the lines can be misleading.
Regards
From India, Delhi
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Dear Friends,
I beg to differ on the comments that a loan amount can be adjusted against gratuity. Speaking legally, the A.P. High Court, in the case of Yada Laxmi Vs. A.P. State Co-op. Bank in 2006, has held that an employee cannot pledge or permit the adjustment of payment of gratuity before it has accrued to him. The Payment of Gratuity Act, as well as section 60 of CPC, were amended to keep the entire amount of gratuity out of the purview of attachment or other adjustments.
In this case, the employee took a loan from the bank, and unfortunately, he expired before repayment. The bank adjusted the gratuity amount of the employee against the loan. The employee's wife claimed the gratuity, and the court rejected the concept of the bank's adjustment of the loan against gratuity and directed the bank to release the gratuity.
Section 13 of the Gratuity Act provides immunity from the attachment of the gratuity amount, even from a court order. The Supreme Court, in the case of Calcutta Dock Labour Board in 1985, held that even if the gratuity was payable in any other scheme, it would squarely come under the purview of the act concerning attachment.
Many organizations may be adopting the practice of having agreements from unions or workers regarding the adjustment of loans against gratuity, but such agreements, undertakings, or declarations have no legal sanctity if challenged in a court of law. This system works until it is challenged, but that does not mean that this kind of arrangement is legal.
Regards,
Anil Kaushik Chief Editor, Business Manager-HR Magazine B-138, Ambedkar Nagar, Alwar-301001 (Raj.) India 09829133699
From India, Delhi
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I beg to differ on the comments that a loan amount can be adjusted against gratuity. Speaking legally, the A.P. High Court, in the case of Yada Laxmi Vs. A.P. State Co-op. Bank in 2006, has held that an employee cannot pledge or permit the adjustment of payment of gratuity before it has accrued to him. The Payment of Gratuity Act, as well as section 60 of CPC, were amended to keep the entire amount of gratuity out of the purview of attachment or other adjustments.
In this case, the employee took a loan from the bank, and unfortunately, he expired before repayment. The bank adjusted the gratuity amount of the employee against the loan. The employee's wife claimed the gratuity, and the court rejected the concept of the bank's adjustment of the loan against gratuity and directed the bank to release the gratuity.
Section 13 of the Gratuity Act provides immunity from the attachment of the gratuity amount, even from a court order. The Supreme Court, in the case of Calcutta Dock Labour Board in 1985, held that even if the gratuity was payable in any other scheme, it would squarely come under the purview of the act concerning attachment.
Many organizations may be adopting the practice of having agreements from unions or workers regarding the adjustment of loans against gratuity, but such agreements, undertakings, or declarations have no legal sanctity if challenged in a court of law. This system works until it is challenged, but that does not mean that this kind of arrangement is legal.
Regards,
Anil Kaushik Chief Editor, Business Manager-HR Magazine B-138, Ambedkar Nagar, Alwar-301001 (Raj.) India 09829133699
From India, Delhi
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Sir, thanks for your suggestion. Certainly, I will take care of that.
Now I am coming to the question of the Author of this thread.
"We have a Long-Term Settlement with Union for giving a Loan in which we have a clause for the recovery of any outstanding amount at the time of separation against Gratuity payable to the person." Is it legal?? What can be the consequences??
Yes, it's illegal. I would like to refer here to section 14 of the Act, which clearly gives an overriding effect to other enactments, any instruments, and contracts, etc., as the same was also held by Allahabad High Court LLR 1119 All. It's a special act, and in case of any dispute regarding any other enactment, contract, or instrument, this Act shall prevail.
Further views of members are welcome.
Regards
From India, Delhi
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Now I am coming to the question of the Author of this thread.
"We have a Long-Term Settlement with Union for giving a Loan in which we have a clause for the recovery of any outstanding amount at the time of separation against Gratuity payable to the person." Is it legal?? What can be the consequences??
Yes, it's illegal. I would like to refer here to section 14 of the Act, which clearly gives an overriding effect to other enactments, any instruments, and contracts, etc., as the same was also held by Allahabad High Court LLR 1119 All. It's a special act, and in case of any dispute regarding any other enactment, contract, or instrument, this Act shall prevail.
Further views of members are welcome.
Regards
From India, Delhi
Acknowledge(0)Amend(0)- With due respect, I beg to differ with Senior Member Mr. P S Dhingra.
- Section 13 is not allowing even courts of this country to attach gratuity amount. It is obvious that, when any court passes decree or order for attachment, it is with due legal process. But still gratuity amount is protected by the specific provisions under section 13.
- It is needless to mention that, most of the labor and social security legislations are enacted to protect rights of Labor and in most of litigations courts in India have favored the labor.
- It is very naïve on part of Mr. Dhingra to argue that, since there is no specific mention of words ‘Employer’ or ‘Loan’ in act, means employer can collect outstanding loan from gratuity due.
- Further by arguing in very same way like Mr. Dhingra, since there is no specific mention in the act that, ‘employer can recover outstanding loan from gratuity’ , loans can not be recovered from gratuity due.
- I feel if courts are prohibited from attaching gratuity then employer is also obviously prohibited from same which goes without saying.
From India, Pune
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Dear Sir,
Can you please help me with Gratuity issues? I have been working in a private company for the past 6 years. I want to know if I am eligible to claim Gratuity because there have been no PF deductions in this company, and I have been transferred from one company to another within the same group.
Kindly provide me with information on the rules regarding Gratuity.
Regards,
S. Sujatha
From India, Madras
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Can you please help me with Gratuity issues? I have been working in a private company for the past 6 years. I want to know if I am eligible to claim Gratuity because there have been no PF deductions in this company, and I have been transferred from one company to another within the same group.
Kindly provide me with information on the rules regarding Gratuity.
Regards,
S. Sujatha
From India, Madras
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Dear Kaushik,
Reading between the lines is always dangerous and misleading, creating more confusion rather than solving any problem. The case law "Yada Laxmi v/s A.P State Corporation Bank, LLR 2006 (106)", as referred to by you, pertains only to the deceased employee, not any other retiring, resigning, or terminated employee. Also, it is not a case of attachment by any court of law. Therefore, the reference to the aspect of attachment is irrelevant in this case.
Please read the case in its entirety to arrive at your learned opinion. This is important, especially considering that you are an editor of an HR magazine. Accordingly, you may need to review your reply.
Dear Friends,
I beg to differ on the comments that a loan amount can be adjusted against gratuity. Speaking legally, the A.P. High Court, in the case of Yada Laxmi vs. A.P. State Co-op. Bank in 2006, held that an employee cannot pledge or permit the adjustment of the payment of gratuity before it has accrued to him. The Payment of Gratuity Act, as well as Section 60 of CPC, were amended to keep the entire amount of gratuity out of the purview of attachment or other adjustments.
In this case, the employee took a loan from the bank and unfortunately passed away before repayment. The bank adjusted the gratuity amount of the employee against the loan. The employee's wife claimed the gratuity, and the court rejected the bank's concept of adjusting the loan against gratuity, directing the bank to release the gratuity.
Section 13 of the Gratuity Act provides immunity from the attachment of the gratuity amount, even from a court order. The Supreme Court, in the case of Calcutta Dock Labour Board in 1985, held that even if the gratuity was payable in any other scheme, it would squarely come under the purview of the act regarding attachment.
Many organizations may be adopting the practice of obtaining agreements from unions or workers regarding the adjustment of loans against gratuity, but such agreements, undertakings, or declarations have no legal sanctity if challenged in a court of law. This system works until it is challenged, but that does not mean that this kind of arrangement is legal.
Regards,
Anil Kaushik
Chief Editor, Business Manager - HR Magazine
B-138, Ambedkar Nagar, Alwar-301001 (Raj.) India
09829133699
From India, Delhi
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Reading between the lines is always dangerous and misleading, creating more confusion rather than solving any problem. The case law "Yada Laxmi v/s A.P State Corporation Bank, LLR 2006 (106)", as referred to by you, pertains only to the deceased employee, not any other retiring, resigning, or terminated employee. Also, it is not a case of attachment by any court of law. Therefore, the reference to the aspect of attachment is irrelevant in this case.
Please read the case in its entirety to arrive at your learned opinion. This is important, especially considering that you are an editor of an HR magazine. Accordingly, you may need to review your reply.
Dear Friends,
I beg to differ on the comments that a loan amount can be adjusted against gratuity. Speaking legally, the A.P. High Court, in the case of Yada Laxmi vs. A.P. State Co-op. Bank in 2006, held that an employee cannot pledge or permit the adjustment of the payment of gratuity before it has accrued to him. The Payment of Gratuity Act, as well as Section 60 of CPC, were amended to keep the entire amount of gratuity out of the purview of attachment or other adjustments.
In this case, the employee took a loan from the bank and unfortunately passed away before repayment. The bank adjusted the gratuity amount of the employee against the loan. The employee's wife claimed the gratuity, and the court rejected the bank's concept of adjusting the loan against gratuity, directing the bank to release the gratuity.
Section 13 of the Gratuity Act provides immunity from the attachment of the gratuity amount, even from a court order. The Supreme Court, in the case of Calcutta Dock Labour Board in 1985, held that even if the gratuity was payable in any other scheme, it would squarely come under the purview of the act regarding attachment.
Many organizations may be adopting the practice of obtaining agreements from unions or workers regarding the adjustment of loans against gratuity, but such agreements, undertakings, or declarations have no legal sanctity if challenged in a court of law. This system works until it is challenged, but that does not mean that this kind of arrangement is legal.
Regards,
Anil Kaushik
Chief Editor, Business Manager - HR Magazine
B-138, Ambedkar Nagar, Alwar-301001 (Raj.) India
09829133699
From India, Delhi
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Dear vkokamthankar,
Differing in opinion is your right. You can differ with me or even with all other members of this forum. Nobody can prohibit you. If you feel something, others can also express their feelings. If you can declare it as naive on my part to discuss or argue, I can also declare naive on your part to discuss or argue like that in which you have tried to stress your point.
MIND IT, interpretation of any legal provision, except on the face of the existing provision of the language, is not within the right of any one except the Ministry of Law of the Government of India, or the competent court of law. Nobody can add or omit any specific word against the existing provisions in he legal language. So, your interpretation about Section 13 with stress on the word EVEN, while stating "not allowing even courts of this country to attach gratuity amount" dos not justify at all, when the language is very clear and specifically meant for courts only.
Would you kindly like to clarify, who else can attach the amount due to be paid to any one? Can employer issue an attachment order? For your information attachment cannot be made by any person other than a court of law. So, where comes the question of attachment by EVEN courts?.
Evidently, just to oppose my views, you clearly seem to have forgotten that the present case, as referred to by the poster of this thread DOES NOT RELATE TO ATTACHMENT or FORFEITURE of gratuity.
The question of attachment by courts arise in cases filed by any third party, not having been related to the employer or the employment of the concerned employee, like Banks, Mortgage companies, etc. So, the Section 13 provides protection from attachment by courts against the debt of any third party against the employee. You may better discuss this issue with some judge to have clarification about attachment or the provisions of Section 13 of the Gratuity Act, if you feel my opinion is wrong.
If there is no specific mention of words ‘Employer’ or ‘Loan’ in act, it is clearly evident that the provisions do not automatically bar the employer, who pays the money to adjust his own dues out of the dues admissible to the employee. Rather, it is clearly naive on your part to intentionally apply the provisions of the section negatively against the employer, when section 13 has no relation with the employee and has specifically been designed to prohibit the courts to unnecessarily attach the dues against of the employee against the dues of the third parties. You are advised to reread the section to make clear what actually hat states.
Further, any judgment of any case law does not become universal. That is applicable individually only to the concerned case or if allowed specifically to some other particular case by virtue of the judgment of any court.
MIND IT, I am not an anti-employee person, which you can definitely observe from my hundreds of posts available in this very forum. Of course, to call a spade a spade is my habit, may that be in favor of employee or an employer that I discuss very frankly.
PS Dhingra
From India, Delhi
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Differing in opinion is your right. You can differ with me or even with all other members of this forum. Nobody can prohibit you. If you feel something, others can also express their feelings. If you can declare it as naive on my part to discuss or argue, I can also declare naive on your part to discuss or argue like that in which you have tried to stress your point.
MIND IT, interpretation of any legal provision, except on the face of the existing provision of the language, is not within the right of any one except the Ministry of Law of the Government of India, or the competent court of law. Nobody can add or omit any specific word against the existing provisions in he legal language. So, your interpretation about Section 13 with stress on the word EVEN, while stating "not allowing even courts of this country to attach gratuity amount" dos not justify at all, when the language is very clear and specifically meant for courts only.
Would you kindly like to clarify, who else can attach the amount due to be paid to any one? Can employer issue an attachment order? For your information attachment cannot be made by any person other than a court of law. So, where comes the question of attachment by EVEN courts?.
Evidently, just to oppose my views, you clearly seem to have forgotten that the present case, as referred to by the poster of this thread DOES NOT RELATE TO ATTACHMENT or FORFEITURE of gratuity.
The question of attachment by courts arise in cases filed by any third party, not having been related to the employer or the employment of the concerned employee, like Banks, Mortgage companies, etc. So, the Section 13 provides protection from attachment by courts against the debt of any third party against the employee. You may better discuss this issue with some judge to have clarification about attachment or the provisions of Section 13 of the Gratuity Act, if you feel my opinion is wrong.
If there is no specific mention of words ‘Employer’ or ‘Loan’ in act, it is clearly evident that the provisions do not automatically bar the employer, who pays the money to adjust his own dues out of the dues admissible to the employee. Rather, it is clearly naive on your part to intentionally apply the provisions of the section negatively against the employer, when section 13 has no relation with the employee and has specifically been designed to prohibit the courts to unnecessarily attach the dues against of the employee against the dues of the third parties. You are advised to reread the section to make clear what actually hat states.
Further, any judgment of any case law does not become universal. That is applicable individually only to the concerned case or if allowed specifically to some other particular case by virtue of the judgment of any court.
MIND IT, I am not an anti-employee person, which you can definitely observe from my hundreds of posts available in this very forum. Of course, to call a spade a spade is my habit, may that be in favor of employee or an employer that I discuss very frankly.
PS Dhingra
From India, Delhi
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Dear Sujatha,
Having already served for 5 years and more, you are quite eligible for the gratuity to claim from the previous organization. So, you must claim that or get confirmed in writing from your present employer that your service with the past employer (sister company), being under the same group of companies, would also be accounted for in the present employment while parting with the organization. If you don't get that confirmed now, the matter may get disputed later on, and you may have to knock the door of the court of law to claim your dues.
PS Dhingra
From India, Delhi
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Having already served for 5 years and more, you are quite eligible for the gratuity to claim from the previous organization. So, you must claim that or get confirmed in writing from your present employer that your service with the past employer (sister company), being under the same group of companies, would also be accounted for in the present employment while parting with the organization. If you don't get that confirmed now, the matter may get disputed later on, and you may have to knock the door of the court of law to claim your dues.
PS Dhingra
From India, Delhi
Acknowledge(0)Amend(0)Can you support your contention with any relevant case law that its against the third party not against the employer, it does not matter whether protection provided is against third party or the employer himself.
Is it mention in Act any where?is it not your own interpretation. Please if you can
Agree with you that attachment is the subject matter of Courts but even deduction, recoveries or withhold also come under the preview of Section 13.
If it would have been not so then certainly as contended by you, the court would have allowed to deducted or withhold the payment of gratuity against any dues of employee, but not in a single case. if its in your knowedge then kindly point out.
There are a catina of judgments wherein the court has bared employer from withholding/deduction from employer( if you want I can mention), without any attachment from the court against the outstanding dues..
Withholding/adjustment/recoveries against outstanding dues to an employees is a sort of attachment as held in recent judgment Neyveli Lignite Corp Ltd V/s O Raju and others 2010 LLR 506(Mad) it was not open to the respondent that they were justified in the denying, payment of gratuity amount of account of the failure of employee to pay house rent, electricity charge.
So it if there is any adjustment or recovery of any dues then it's a sort of attachment. Such an action is not possible in view of section 13
Even a workmen give undertaking for making deductions, the gratuity of an employee can not be withheld Ram Ranjan Mukhjeri V/s Minining and Allied Machinery Corporation Ltd 2001 LLR 297(Cal HC).
As far as concerned about the interpretation these interpretation are done by the competent court of law not by any individual for their gain or profit, just to save the essence of Gratuity Act being social peace of legislation.
For the answer to the Author of this thread who has asked about the legality of settlement which allow adjustment from the Gratuity is illegal. It’s an agreement.
Section 14 of the Act which clear give override effect to other enactments, any instruments and contract etc. as the same also held in by Ahalabad High Court 2010 LLR 1119 All.
I know that it depend on the fact & circumstance of the each case, but where the same question arise before the High Court or lower court, lower court take into consideration and have binding effect within that state & have a pervasive value for others, until and unless the same has been over ruled by the Court of a higher jurisdiction or by Double Bench or (B.D). or for your information if any judgment passed by Supreme Court of India, it's have a binding effect by virtue of Article 141 of constitution.
Further view of members are invited.
regards
From India, Delhi
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Dear Essykkr,
By trying to twist the argument can't make your point. You have been referring to case laws pertaining to deduction from the gratuity in respect of charges of residential accommodation allotted to the employees, or withholding of gratuity on some pretext, or attachment by court of law, etc. None of the case relate to payment of part amount of gratuity by adjustment of existing balance of loan. You are not coming forward with such type of case, WHEN YOU FULLY AGREE that "it depend on the fact & circumstance of the each case"
SO, if your interpretation is correct why not come forward with some SPECIFIC case law about loantaken by employee but the employer was barred by any court not to adjust the outstanding loan amount out of the gratuity by paying the balance amount? If there are several cases pertaining to attachments, withholding, non-payment of gratuity, there must be the cases pertaining to adjustment of the outstanding balances of loans taken by the employees from their employers.
If we go by your interpretation, employees would start taking home loans of several lakhs from their employers and then resign to join another company and claim their gratuity from the past employer. They would continue with the same practice with other employers also and would be able to garner even hundreds of lakhs from their several employers by switching over from one employer to another every five years.
REALLY GREAT ON YOUR PART NOT ONLY TO STRESS UPON YOUR POINT BY TWISTING THE PROVISIONS OF LAW, BUT ALSO TO ENCOURAGE ON FRAUDULENT ACTIVITIES BY EMPLOYEES!
May I suggest you, why not you experiment yourself by taking loan from your employer and then resign and claim your full gratuity, and if your employer adjusts the balance of loan amount take the shelter of Section 13 of the Payment of Gratuity Act and get the case settled in your favor. That way you would also be able to set an example to prove your own point. RATHER I POSE A CHALLENGE ON YOU, you won't be able to get that example set even through a court of law.
From India, Delhi
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By trying to twist the argument can't make your point. You have been referring to case laws pertaining to deduction from the gratuity in respect of charges of residential accommodation allotted to the employees, or withholding of gratuity on some pretext, or attachment by court of law, etc. None of the case relate to payment of part amount of gratuity by adjustment of existing balance of loan. You are not coming forward with such type of case, WHEN YOU FULLY AGREE that "it depend on the fact & circumstance of the each case"
SO, if your interpretation is correct why not come forward with some SPECIFIC case law about loantaken by employee but the employer was barred by any court not to adjust the outstanding loan amount out of the gratuity by paying the balance amount? If there are several cases pertaining to attachments, withholding, non-payment of gratuity, there must be the cases pertaining to adjustment of the outstanding balances of loans taken by the employees from their employers.
If we go by your interpretation, employees would start taking home loans of several lakhs from their employers and then resign to join another company and claim their gratuity from the past employer. They would continue with the same practice with other employers also and would be able to garner even hundreds of lakhs from their several employers by switching over from one employer to another every five years.
REALLY GREAT ON YOUR PART NOT ONLY TO STRESS UPON YOUR POINT BY TWISTING THE PROVISIONS OF LAW, BUT ALSO TO ENCOURAGE ON FRAUDULENT ACTIVITIES BY EMPLOYEES!
May I suggest you, why not you experiment yourself by taking loan from your employer and then resign and claim your full gratuity, and if your employer adjusts the balance of loan amount take the shelter of Section 13 of the Payment of Gratuity Act and get the case settled in your favor. That way you would also be able to set an example to prove your own point. RATHER I POSE A CHALLENGE ON YOU, you won't be able to get that example set even through a court of law.
From India, Delhi
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Dear Friends,
With respect to all learned members, I am of the view that the discussion on the point has gone out of good taste. Everyone has their own view and the right to put it forward. No one should let others down by attempting to prove that they are fools. The views expressed in this forum should not be taken as the final verdict on any point. Members asking queries should also not take them that way and must seek advice from their company's legal experts because in such matters, the company is the only stakeholder, and no one else. The facts of each case differ, and so do the views.
If all of us indulge in word bullets firing at each other, the platform will lose its prime objective. However, with all humility, I stand by my version. I am fully aware of my responsibility while expressing my views on any point as the editor of a professional journal that is read and respected by thousands of readers every month.
Regards,
Anil Kaushik
From India, Delhi
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With respect to all learned members, I am of the view that the discussion on the point has gone out of good taste. Everyone has their own view and the right to put it forward. No one should let others down by attempting to prove that they are fools. The views expressed in this forum should not be taken as the final verdict on any point. Members asking queries should also not take them that way and must seek advice from their company's legal experts because in such matters, the company is the only stakeholder, and no one else. The facts of each case differ, and so do the views.
If all of us indulge in word bullets firing at each other, the platform will lose its prime objective. However, with all humility, I stand by my version. I am fully aware of my responsibility while expressing my views on any point as the editor of a professional journal that is read and respected by thousands of readers every month.
Regards,
Anil Kaushik
From India, Delhi
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Dear Essykkr,
I have not taken it personally, nor do I intend to take anything personally. However, I am not in favor of misleading the community.
Regarding the case of Yada Laxmi v/s A.P. State Co-operative Bank 2006(1) ALD733, I have already pointed out that the case pertained to a deceased employee where the gratuity was due to be paid to his heirs. For your information, gratuity to be paid to the heirs of the deceased is not liable to be slashed or withheld on account of any amount of loan outstanding against the deceased employee. This does not apply to living employees who have retired or resigned. If you have any instances of case law pertaining to living employees retiring or resigning and claiming full gratuity through the court of law, where there was an outstanding loan against them, you are welcome to quote that, as it would enhance my knowledge as well.
Loans and other dues outstanding against a deceased employee have to be waived. However, in the case of a living employee parting ways with the organization through resignation or retirement, the management has the full right to recover the organization's dues from them.
It is essential to apply our common sense while discharging our duties sincerely and not always resort to legal action. Court cases arise when management tries to impose undue and irrational authority over employees or their heirs. Laws exist to prevent employers from acting highhandedly; otherwise, there would be no need for such laws if employers always acted rationally and ethically.
PS Dhingra
From India, Delhi
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I have not taken it personally, nor do I intend to take anything personally. However, I am not in favor of misleading the community.
Regarding the case of Yada Laxmi v/s A.P. State Co-operative Bank 2006(1) ALD733, I have already pointed out that the case pertained to a deceased employee where the gratuity was due to be paid to his heirs. For your information, gratuity to be paid to the heirs of the deceased is not liable to be slashed or withheld on account of any amount of loan outstanding against the deceased employee. This does not apply to living employees who have retired or resigned. If you have any instances of case law pertaining to living employees retiring or resigning and claiming full gratuity through the court of law, where there was an outstanding loan against them, you are welcome to quote that, as it would enhance my knowledge as well.
Loans and other dues outstanding against a deceased employee have to be waived. However, in the case of a living employee parting ways with the organization through resignation or retirement, the management has the full right to recover the organization's dues from them.
It is essential to apply our common sense while discharging our duties sincerely and not always resort to legal action. Court cases arise when management tries to impose undue and irrational authority over employees or their heirs. Laws exist to prevent employers from acting highhandedly; otherwise, there would be no need for such laws if employers always acted rationally and ethically.
PS Dhingra
From India, Delhi
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Dear Sir,
Yes, Sujatha, you are very much entitled to receive payment of Gratuity since you have already fulfilled the qualifying criterion of 5 years of continuous service in the company.
However, payment of Gratuity shall become due only upon your cessation of employment with your present employer.
That you have been transferred from one group company to another does not interfere with your period of continuous employment.
The rules with regard to entitlement to Gratuity are:
1. To become eligible, you have to complete five years of continuous employment with a company.
This clause does not apply in case of death while in employment.
2. Gratuity is payable only when you leave the organization by way of resignation or superannuation.
3. Gratuity is calculated at 15 days' wages for every completed year of service.
The formula is Wages/26 x 15 x No. of years of service.
Best wishes,
Vasant Nair
09717726667
From India, Mumbai
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Yes, Sujatha, you are very much entitled to receive payment of Gratuity since you have already fulfilled the qualifying criterion of 5 years of continuous service in the company.
However, payment of Gratuity shall become due only upon your cessation of employment with your present employer.
That you have been transferred from one group company to another does not interfere with your period of continuous employment.
The rules with regard to entitlement to Gratuity are:
1. To become eligible, you have to complete five years of continuous employment with a company.
This clause does not apply in case of death while in employment.
2. Gratuity is payable only when you leave the organization by way of resignation or superannuation.
3. Gratuity is calculated at 15 days' wages for every completed year of service.
The formula is Wages/26 x 15 x No. of years of service.
Best wishes,
Vasant Nair
09717726667
From India, Mumbai
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Dear Friends,
One of my relatives retired from Maharashtra Zilla Parishad Services in May 2012. The Zilla Parishad had sanctioned him the Senior Pay Scale with effect from 1990 (in 2004). Now at the time of retirement, the auditors are saying that the Senior Pay Scale was sanctioned in the wrong manner by the committee authorized to sanction Senior Pay Scale by the Chief Executive Officer of Zilla Parishad. They have initiated a recovery of over 2 lakh rupees from the gratuity amount, which is more than 50% of the whole gratuity amount. No pension has been sanctioned after 7 months of retirement.
So, my questions are:
1) Can they recover this amount from gratuity?
2) Can auditors change decisions which are not clerical or mathematical in nature? The decision to sanction the Senior Pay Scale was taken by the Special Committee formed only for deciding on the Senior Pay Scale of employees. (Please cite case laws)
3) Can they delay payment of pension due to this recovery process?
From India, Pune
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One of my relatives retired from Maharashtra Zilla Parishad Services in May 2012. The Zilla Parishad had sanctioned him the Senior Pay Scale with effect from 1990 (in 2004). Now at the time of retirement, the auditors are saying that the Senior Pay Scale was sanctioned in the wrong manner by the committee authorized to sanction Senior Pay Scale by the Chief Executive Officer of Zilla Parishad. They have initiated a recovery of over 2 lakh rupees from the gratuity amount, which is more than 50% of the whole gratuity amount. No pension has been sanctioned after 7 months of retirement.
So, my questions are:
1) Can they recover this amount from gratuity?
2) Can auditors change decisions which are not clerical or mathematical in nature? The decision to sanction the Senior Pay Scale was taken by the Special Committee formed only for deciding on the Senior Pay Scale of employees. (Please cite case laws)
3) Can they delay payment of pension due to this recovery process?
From India, Pune
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Respected All,
We are facing a long-term case in which a judgment was ruled in our favor in the year 2012.
The situation is as follows: An employee from the Central Pollution Control Board, New Delhi, had borrowed some money from our family but failed to repay it on time. Subsequently, we filed a case based on these grounds, and the judgment favored us. Following the verdict, the individual was no longer reachable at his home address and left his job without prior notice at his office.
Could you please advise if the recovery can be made from his gratuity amount? If possible, kindly provide the relevant Act and any precedents related to such cases.
Your cooperation will be greatly appreciated as we have been dealing with this issue for many years.
Thank you,
Manoj Kumar
+91 9711110388
From India, New Delhi
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We are facing a long-term case in which a judgment was ruled in our favor in the year 2012.
The situation is as follows: An employee from the Central Pollution Control Board, New Delhi, had borrowed some money from our family but failed to repay it on time. Subsequently, we filed a case based on these grounds, and the judgment favored us. Following the verdict, the individual was no longer reachable at his home address and left his job without prior notice at his office.
Could you please advise if the recovery can be made from his gratuity amount? If possible, kindly provide the relevant Act and any precedents related to such cases.
Your cooperation will be greatly appreciated as we have been dealing with this issue for many years.
Thank you,
Manoj Kumar
+91 9711110388
From India, New Delhi
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Dear PSDHINGRA , I worked with a Bank. If the Gratuity is credited into my account then does the bank has the power to recover the amount from my account without my consent.
From India, New Delhi
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From India, New Delhi
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Gratuity is a lump sum and one-time payment ensured to the employees by special legislation only on account of certain modes of termination of their employment specified therein. That particular law has been recognized as a complete Code in itself in this regard. So, my viewpoint is that everything connected with gratuity has to be approached from the perspective of what the Payment of Gratuity Act, 1972 stands for.
Even those learned members who are of the opinion that the amounts due from the outgoing employee can be recovered by the employer from his gratuity would admit that the P.G Act is a social security legislation. Forfeiture, either partial or whole, of the amount of gratuity is certainly different from the recovery of dues from the gratuity by way of adjustment or otherwise. Therefore, recovery of any monetary dues created out of the subsisting employment relationship between the employer and employee cannot be effected in any manner from his gratuity which arises only on the termination of the employment relationship. In view of this fact as well as the provision of Sec.14 of the Act, it is to be noted that any settlement or agreement envisaging the recovery of or adjustment of monetary dues from/against the amount of gratuity is null and void.
Similarly, the protection of gratuity ensured under section 13 of the Act is only against attachment in execution of any decree or order of any court seems to be a hyper-technical argument.
From India, Salem
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Even those learned members who are of the opinion that the amounts due from the outgoing employee can be recovered by the employer from his gratuity would admit that the P.G Act is a social security legislation. Forfeiture, either partial or whole, of the amount of gratuity is certainly different from the recovery of dues from the gratuity by way of adjustment or otherwise. Therefore, recovery of any monetary dues created out of the subsisting employment relationship between the employer and employee cannot be effected in any manner from his gratuity which arises only on the termination of the employment relationship. In view of this fact as well as the provision of Sec.14 of the Act, it is to be noted that any settlement or agreement envisaging the recovery of or adjustment of monetary dues from/against the amount of gratuity is null and void.
Similarly, the protection of gratuity ensured under section 13 of the Act is only against attachment in execution of any decree or order of any court seems to be a hyper-technical argument.
From India, Salem
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Dear Anuj,
Gratuity, once paid, whether by credit to the bank account by the employer, cannot be recovered from the employee's bank account. It is important to note that the roles of an employer towards its employee and the role of a banker for an individual are distinct and should not overlap.
From India, Delhi
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Gratuity, once paid, whether by credit to the bank account by the employer, cannot be recovered from the employee's bank account. It is important to note that the roles of an employer towards its employee and the role of a banker for an individual are distinct and should not overlap.
From India, Delhi
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I think many of them are giving wrong information. You cannot recover outstanding amounts from gratuity, and it's illegal. I request those who said it's legal to kindly go through the Gratuity Act and case studies clearly.
From India
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From India
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Dear Balaji,
I believe that there may be misinformation being shared by some individuals. It is not permissible to recover outstanding amounts from gratuity as it is considered illegal. I kindly request those who have stated otherwise to thoroughly review the gratuity act and relevant case studies.
Instead of requesting everyone to review the entire Act, it would be more helpful if you could specifically reference the section of the Act that prohibits the recovery of employer's dues from employees. For example, this could include outstanding balances from home loans, advances, or losses in any establishment.
I hope this clarifies the matter. Thank you.
From India, Delhi
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I believe that there may be misinformation being shared by some individuals. It is not permissible to recover outstanding amounts from gratuity as it is considered illegal. I kindly request those who have stated otherwise to thoroughly review the gratuity act and relevant case studies.
Instead of requesting everyone to review the entire Act, it would be more helpful if you could specifically reference the section of the Act that prohibits the recovery of employer's dues from employees. For example, this could include outstanding balances from home loans, advances, or losses in any establishment.
I hope this clarifies the matter. Thank you.
From India, Delhi
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The Hon'ble Supreme Court, vide its order dated December 15, 2020, in Steel Authority of India Limited vs. Raghbendra Singh & Ors (Special Leave to Appeal No. 11025/2020), has laid down that there does not exist any constraint regarding withholding an employee's gratuity against the recovery of dues from such an employee, including penal rent, which in the instant case pertained to the overstay by the employee in the official company-provided accommodation.
In the light of the above judgment of the Apex Court, the participants in this post may need to reconsider their positions.
Jacob Pratap Deputy Labour Commissioner, Punjab (Retd.)
From India, Chandigarh
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In the light of the above judgment of the Apex Court, the participants in this post may need to reconsider their positions.
Jacob Pratap Deputy Labour Commissioner, Punjab (Retd.)
From India, Chandigarh
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As an employee, I worked in the organization for 7.5 years. Before leaving the organization, I had taken a loan of Rs. one lakh. Three months before my departure, some amount was deducted from my salary. The remaining balance amount can be recovered from gratuity. Please confirm in which section this falls.
From India, New Delhi
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From India, New Delhi
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There is no provision in the Payment of Gratuity Act 1972 providing for the recovery of any sum due to the employer from the gratuity due and payable to an employee. Indeed, the requirement is the opposite - that the full amount of gratuity is payable to the employee upon termination of service. However, if the employee agrees, take a declaration authorizing deduction and release the remaining amount or take a cheque for the amount due and advise the bank to credit only the remaining amount to the employee's account. Though this is not fully legal, it could be tried in the facts and circumstances of the matter.
From India, Mumbai
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From India, Mumbai
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My friend had been working for almost 19 years for an MNC. He was terminated from his job because he was unable to attend work for three months. When he asked for his gratuity payment, the company denied paying him gratuity for his housing assistance loan. It has been almost five years since his termination, and his gratuity is still pending. Please advise.
From India, Guwahati
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From India, Guwahati
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Gratuity Form T- recovery.pdf