Received Notice from Controlling Authority under Payment of Gratuity Act regarding short payment of gratuity to an employee. Can an advocate represent employer in the appearance before the Controlling Authority?
From India, Delhi
4From India, Delhi
Yes, you can engage an advocate, file a counter statement to the claim through him and he would conduct the case on your behalf.
From India, Salem
From India, Salem
Have you cross checked the correctness of the amount paid? If there is an error on your side, it is better to pay up, rather than defending something which may not be correct.
From India, Pune
From India, Pune
Dear Manish,
To whom do we pay the gratuity? We pay the gratuity to the eligible employee. In addition to the eligibility, there is proper formula to calculate the gratuity. Now the question arises is whether for the short payment, did the ex-employee approach you and if yes, then did you prove correctness of your calculation?
I doubt whether employee has approached the labour official directly without approaching you. If your calculations are correct then there is no and need to hire lawyer as such. You too can go to the labour office and present your case.
Secondly, the "controlling authority" that has given you the notice must have calculated the gratuity. Have they mentioned their amount in the letter? What is the difference? Did you ponder over the difference as to what could be the cause of that difference?
The formula for gratuity is: Last drawn salary (basic salary plus dearness allowance) x (number of completed years of service) x (15/26).
According to this formula, the time period of over six months or more is considered as one year.
I feel that the difference in amount could be arising because of different basic salary and DA was considered or different years of service was considered. You can do the reverse calculations on your own and find out the cause of the difference.
Thanks,
Dinesh Divekar
From India, Bangalore
To whom do we pay the gratuity? We pay the gratuity to the eligible employee. In addition to the eligibility, there is proper formula to calculate the gratuity. Now the question arises is whether for the short payment, did the ex-employee approach you and if yes, then did you prove correctness of your calculation?
I doubt whether employee has approached the labour official directly without approaching you. If your calculations are correct then there is no and need to hire lawyer as such. You too can go to the labour office and present your case.
Secondly, the "controlling authority" that has given you the notice must have calculated the gratuity. Have they mentioned their amount in the letter? What is the difference? Did you ponder over the difference as to what could be the cause of that difference?
The formula for gratuity is: Last drawn salary (basic salary plus dearness allowance) x (number of completed years of service) x (15/26).
According to this formula, the time period of over six months or more is considered as one year.
I feel that the difference in amount could be arising because of different basic salary and DA was considered or different years of service was considered. You can do the reverse calculations on your own and find out the cause of the difference.
Thanks,
Dinesh Divekar
From India, Bangalore
Taking the present discussion further on the lines indicated by our learned friends M/s Nathrao and Dinesh , I would like to add the following about the possible reasons for disputed gratuity claims under the Payment of Gratuity Act, 1972 :
1)Relating to the length of continuous service :
Normally some employers might be under the wrong impression that an employee's continuous service for the purpose of Gratuity counts from the date of regularisation or the date on which he gets enrolled under the EPF Scheme. Hence they may omit the temporary service such as casual labor, trainee, probationer etc. It is not correct in view of the deeming provisions of Section 2 - A of the PGAct, 1972 defining "Continuous Service" for the purpose of Gratuity under the Act.
2)Change in the constitution of the establishment subsequent to the appointment of the employee:
The subsequent change in the constitution of the establishment like sole proprietorship being converted later as partnership or Private limited or a private limited company being turned into a public limited company etc are mere cosmetic change and as such it cannot affect the continuity of the services of the employees who serve all along. Similarly, in the case of transfer of undertakings, the liability to pay gratuity for the services rendered immediately before the transfer gets shifted to the buyer if no mention about it in the transfer deed.
3) Periods of unauthorized absence :
Any period of unauthorized absence should be treated as break in service as per the Standing Orders or the Service Regulations applicable. If not such periods should be taken into account for the purpose of continuous service. Similarly, the period of suspension, if any undergone pending enquiry should be taken into account for computing continuous service if it was not treated as punishment in the disciplinary proceedings.
4)Wages last drawn :
Last drawn wages or salary means not exactly what received at last but the at which the last salary is payable. When the last drawn salary comprises of different components, only those of basic and dearness allowance have to be taken for the purpose of calculation of Gratuity under the Act :If it is consolidated, the entire amount should be taken into account. It also implies that matters of non payment at the statutory minimum rates of Wages or revised rates consequent on revision of Wages with retrospective effect may lead to disputes later.
5)Withholding of Gratuity :
The gratuity amount payable under the PGAct, 1972 cannot be withheld or adjusted under any circumstances other than those mentioned in section 4(6) of the Act.
Therefore, any employer facing such a dispute under the Payment of Gratuity Act, 1972 should cross check the Payment, if any already paid and ensure such lapses have not occurred either by over sight or by misinterpretation.
From India, Salem
1)Relating to the length of continuous service :
Normally some employers might be under the wrong impression that an employee's continuous service for the purpose of Gratuity counts from the date of regularisation or the date on which he gets enrolled under the EPF Scheme. Hence they may omit the temporary service such as casual labor, trainee, probationer etc. It is not correct in view of the deeming provisions of Section 2 - A of the PGAct, 1972 defining "Continuous Service" for the purpose of Gratuity under the Act.
2)Change in the constitution of the establishment subsequent to the appointment of the employee:
The subsequent change in the constitution of the establishment like sole proprietorship being converted later as partnership or Private limited or a private limited company being turned into a public limited company etc are mere cosmetic change and as such it cannot affect the continuity of the services of the employees who serve all along. Similarly, in the case of transfer of undertakings, the liability to pay gratuity for the services rendered immediately before the transfer gets shifted to the buyer if no mention about it in the transfer deed.
3) Periods of unauthorized absence :
Any period of unauthorized absence should be treated as break in service as per the Standing Orders or the Service Regulations applicable. If not such periods should be taken into account for the purpose of continuous service. Similarly, the period of suspension, if any undergone pending enquiry should be taken into account for computing continuous service if it was not treated as punishment in the disciplinary proceedings.
4)Wages last drawn :
Last drawn wages or salary means not exactly what received at last but the at which the last salary is payable. When the last drawn salary comprises of different components, only those of basic and dearness allowance have to be taken for the purpose of calculation of Gratuity under the Act :If it is consolidated, the entire amount should be taken into account. It also implies that matters of non payment at the statutory minimum rates of Wages or revised rates consequent on revision of Wages with retrospective effect may lead to disputes later.
5)Withholding of Gratuity :
The gratuity amount payable under the PGAct, 1972 cannot be withheld or adjusted under any circumstances other than those mentioned in section 4(6) of the Act.
Therefore, any employer facing such a dispute under the Payment of Gratuity Act, 1972 should cross check the Payment, if any already paid and ensure such lapses have not occurred either by over sight or by misinterpretation.
From India, Salem
Gratuity is a welfare measure to help employees get some sort of financial stability at time of leaving job/retiring etc.
Employers need to keep this expenditure in mind while doing total financial planning for their enterprise.
Trying to cut few thousands on gratuity will only result in legal proceedings, bad image and heartburn.
If employee is entitled pay him w/o finding remote excuses to deny rightful payments.
Employer should go to LIC or other Insurance company and subscribe to a group gratuity fund and leave it to insurance provider to make payments from time to time.
Run your business in savvy manner but not at the cost of penny pinching employee welfare payments.
From India, Pune
Employers need to keep this expenditure in mind while doing total financial planning for their enterprise.
Trying to cut few thousands on gratuity will only result in legal proceedings, bad image and heartburn.
If employee is entitled pay him w/o finding remote excuses to deny rightful payments.
Employer should go to LIC or other Insurance company and subscribe to a group gratuity fund and leave it to insurance provider to make payments from time to time.
Run your business in savvy manner but not at the cost of penny pinching employee welfare payments.
From India, Pune
Hi, i need to send form a and form b to the controlling authority in karanataka for gratuity. how do I get the address?
From India, Delhi
From India, Delhi
Dear Mr Gurmeet,
FORM A-Notice of Opening
FORM B--Notice of Change of Establishment
You have to find out Jurisdictional Controlling Authority-Assistant Labour Commissioner in relation to your establishment.There is no controlling Authority for entire karnataka.You have to find out respective ALC under whose jurisdiction your establishment comes
From India, New Delhi
FORM A-Notice of Opening
FORM B--Notice of Change of Establishment
You have to find out Jurisdictional Controlling Authority-Assistant Labour Commissioner in relation to your establishment.There is no controlling Authority for entire karnataka.You have to find out respective ALC under whose jurisdiction your establishment comes
From India, New Delhi
Uma sir, I have certain queries regarding the punitive suspension thing when it comes to calculating continuity of service. If this is going to be a blanket rule, then won't all companies start abusing the system to deprive employees of social security benefits?
Basically I have seen situations in which companies suspend employees for petty reasons such as client being dissatisfied or just to appease their business partners.
Doesn't the act clearly say that the punishment should have been for riotous behavior that caused monetary damage to the company? This way everyone will circumvent the provisions of the act by giving 2 day suspension on a rotational basis to each person. When the employee has already suffered several days of no pay simply to satisfy the ego of a person, isn't it overstepping to even deprive the person of social security benefits by denying gratuity by discounting continuity? If the year in question has the minimum stipulated number of days, shouldn't it be deemed a full one year in continuity?
From India
Basically I have seen situations in which companies suspend employees for petty reasons such as client being dissatisfied or just to appease their business partners.
Doesn't the act clearly say that the punishment should have been for riotous behavior that caused monetary damage to the company? This way everyone will circumvent the provisions of the act by giving 2 day suspension on a rotational basis to each person. When the employee has already suffered several days of no pay simply to satisfy the ego of a person, isn't it overstepping to even deprive the person of social security benefits by denying gratuity by discounting continuity? If the year in question has the minimum stipulated number of days, shouldn't it be deemed a full one year in continuity?
From India
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Form-R (Rule-17-Notice for payment of Gratuity by the Controlling Authority).pdf
Company Letter for Completion 01 Month Notice.docx