Dear All,
I have come across a case to handle expecting guidance from the Senior Members.
In 2010, Company has made a deed with a Fund House to release Gratuity. As per the Deed, the Gratuity is to be paid on Gross. However the deed was not registered with the IT Department. Till 2012 the Gratuity calculation was done on Gross and since then the company have decided to do the calculations as per Law i.e on Basic (No seprate DA factor as a part of salary). Also, the Company is in a process to amend the current Deed.
Meanwhile a senior employee has retired and demanding the Grauity to be calculated on Gross (as per the pervious deed) and threatning to go to Court of Law. The Company is not agreeing to the same.
What action should be taken? Whether the Company should do the payment on Gross or on basic? What are the legal implications?
From India, Pune
I have come across a case to handle expecting guidance from the Senior Members.
In 2010, Company has made a deed with a Fund House to release Gratuity. As per the Deed, the Gratuity is to be paid on Gross. However the deed was not registered with the IT Department. Till 2012 the Gratuity calculation was done on Gross and since then the company have decided to do the calculations as per Law i.e on Basic (No seprate DA factor as a part of salary). Also, the Company is in a process to amend the current Deed.
Meanwhile a senior employee has retired and demanding the Grauity to be calculated on Gross (as per the pervious deed) and threatning to go to Court of Law. The Company is not agreeing to the same.
What action should be taken? Whether the Company should do the payment on Gross or on basic? What are the legal implications?
From India, Pune
The payment should be done as per the deed. If it has been changed, then the new policy would apply. In case the change is in process and the old deed was in force on the date of retirement of the employee, then the old policy will be applicable.
It is up to the management whether they want to settle the matter amicably or go to court and then pay the employee. They have to understand that it would be their loss as they would have to go through the long litigation process, pay for the legal services and then pay to the employee what is rightfully due to him along with interest and costs as may be decided by Court.
In addition, they would be spoiling their goodwill.
However, the exact status and opinion can be given only after knowing the actual facts of the case.
If you wish to seek expert opinion in the matter, our legal team would be pleased to help.
Thanks,
Kind Regards,
Avika Kapoor
Vice President - Operations
Website: Kapgrow
From India, New Delhi
117It is up to the management whether they want to settle the matter amicably or go to court and then pay the employee. They have to understand that it would be their loss as they would have to go through the long litigation process, pay for the legal services and then pay to the employee what is rightfully due to him along with interest and costs as may be decided by Court.
In addition, they would be spoiling their goodwill.
However, the exact status and opinion can be given only after knowing the actual facts of the case.
If you wish to seek expert opinion in the matter, our legal team would be pleased to help.
Thanks,
Kind Regards,
Avika Kapoor
Vice President - Operations
Website: Kapgrow
From India, New Delhi
The deed is a private document between the company and the fund house,
The employee has no say on the deed, it's implementation or execution.
I assume no payment is deducted from the employee for establishing the fund (though it may be a part of the CTC, that is not amounting to deduction). Also I assume the terms of the deed was not made a part of the terms of employment or communicated to the entire company in a manner amounting to implied promise to pay.
So, the company needs to pay as per law,
The law says you need to pay on basic + da! so that is what matters.
The employee is likely to lose the case (if the facts are as above)
However, you need to sit with your lawyers with the full facts of the case and decide the course if action.
From India, Mumbai
The employee has no say on the deed, it's implementation or execution.
I assume no payment is deducted from the employee for establishing the fund (though it may be a part of the CTC, that is not amounting to deduction). Also I assume the terms of the deed was not made a part of the terms of employment or communicated to the entire company in a manner amounting to implied promise to pay.
So, the company needs to pay as per law,
The law says you need to pay on basic + da! so that is what matters.
The employee is likely to lose the case (if the facts are as above)
However, you need to sit with your lawyers with the full facts of the case and decide the course if action.
From India, Mumbai
Dear Bhaskar Naryani
Your post is silent as to whether the Payment of Gratuity Act is applicable to the employee or not.
Assuming that the Payment of Gratuity Act is applicable, then the employee is entitled to get gratuity from his employer based on his basic pay plus dearness allowance. This is irrespective of the contents of the deed referred to by you. The deed is an arrangement between the employer and the fund managers and does not bind the employee. Moreover, a deed between two individuals, in other words a contract between two individuals (including companies etc.,) cannot over ride the provisions of any law for the time being in force. Therefore whatever be the contents of the deed if it is less favorable than the terms of the Payment of Gratuity Act, then the PG Act will prevail.
In case the Payment of Gratuity Act is not applicable to the employee, then whatever be the terms of the deed, the employee is entitled to get gratuity according to the terms relating to gratuity in his appointment order and if the appointment order does not contain terms relating to gratuity, then the employee will get gratuity according to any scheme for payment of gratuity which are framed by the employer.
With regards
From India, Madras
Your post is silent as to whether the Payment of Gratuity Act is applicable to the employee or not.
Assuming that the Payment of Gratuity Act is applicable, then the employee is entitled to get gratuity from his employer based on his basic pay plus dearness allowance. This is irrespective of the contents of the deed referred to by you. The deed is an arrangement between the employer and the fund managers and does not bind the employee. Moreover, a deed between two individuals, in other words a contract between two individuals (including companies etc.,) cannot over ride the provisions of any law for the time being in force. Therefore whatever be the contents of the deed if it is less favorable than the terms of the Payment of Gratuity Act, then the PG Act will prevail.
In case the Payment of Gratuity Act is not applicable to the employee, then whatever be the terms of the deed, the employee is entitled to get gratuity according to the terms relating to gratuity in his appointment order and if the appointment order does not contain terms relating to gratuity, then the employee will get gratuity according to any scheme for payment of gratuity which are framed by the employer.
With regards
From India, Madras
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