Hi,
My father had been working in a company for 1year 8 months, before he fell ill. Due to his illness, he had to spent the last two and a half months in the hospital. He could not recover from his illness and expired in April 2009.
At that time, his last employer had paid the nominee (my mother), the full and final. But the gratuity was not included in the full and final. It is only now in April 2012 that we came to know of the fact that even in case a employee has not completed 5years of continous service, and expires before that, his nominee is entitiled to receive gratuity amount for the number of years of service of the employee.
Is this understanding correct? If yes, what by formula will the gratuity be calculated in this case.
Also, since the employer's did not pay the gratuity neither in 2009, nor in all these 3years, now is the employer liable to pay any interest/penalty for not paying out the liable gratuity amount to the employees nominee (my mother) for the three lapsed years (from 2009 to 2012)
Please let us know. Any information in this regard will be very helpful.
Regards,
Ritu
From India, Bangalore
My father had been working in a company for 1year 8 months, before he fell ill. Due to his illness, he had to spent the last two and a half months in the hospital. He could not recover from his illness and expired in April 2009.
At that time, his last employer had paid the nominee (my mother), the full and final. But the gratuity was not included in the full and final. It is only now in April 2012 that we came to know of the fact that even in case a employee has not completed 5years of continous service, and expires before that, his nominee is entitiled to receive gratuity amount for the number of years of service of the employee.
Is this understanding correct? If yes, what by formula will the gratuity be calculated in this case.
Also, since the employer's did not pay the gratuity neither in 2009, nor in all these 3years, now is the employer liable to pay any interest/penalty for not paying out the liable gratuity amount to the employees nominee (my mother) for the three lapsed years (from 2009 to 2012)
Please let us know. Any information in this regard will be very helpful.
Regards,
Ritu
From India, Bangalore
Yes. he is eligible for gartuity for two years to be calculated at 15 days wages last drawn by for each completed year of service and service in excess of six months to be traeted as one year.
B.Saikumar
HR &Labour Law advisor
Mumbai
From India, Mumbai
1899B.Saikumar
HR &Labour Law advisor
Mumbai
From India, Mumbai
Many thanks for the reply, Mr. SaiKumar.
Could you please guide with with a couple of more questions.
1. Will the period of two and a half months when he was in the hospital also be included in continous service, coz if we remove those two and a half months, his service become less than 1 year 6 months, and will affect the calculation of the gratuity amount.
2. When we informed my father's last employer that they have'nt paid the gratuity to he nominee, they said it has become a very old case (3years old) and they will have to see if gratuity payout is still applicable and they will internally decide if gratuity is to be paid or not. Is this true, that in old cases or beyond a particular lapsed time of gratuity payout or in any other circumstance, the nominee will not be eligible to receive the gratuity amount. We are waiting to hear back from them.
3. Incase they pay the gratuity, will the employer be liable to pay the nominee, interest on the gartuity amount, for these three lapsed years orany other penalty for not paying the gratuity, on their own, during the full and final.
Awaiting your response, with anticipation.
Thanks,
Ritu
From India, Bangalore
Could you please guide with with a couple of more questions.
1. Will the period of two and a half months when he was in the hospital also be included in continous service, coz if we remove those two and a half months, his service become less than 1 year 6 months, and will affect the calculation of the gratuity amount.
2. When we informed my father's last employer that they have'nt paid the gratuity to he nominee, they said it has become a very old case (3years old) and they will have to see if gratuity payout is still applicable and they will internally decide if gratuity is to be paid or not. Is this true, that in old cases or beyond a particular lapsed time of gratuity payout or in any other circumstance, the nominee will not be eligible to receive the gratuity amount. We are waiting to hear back from them.
3. Incase they pay the gratuity, will the employer be liable to pay the nominee, interest on the gartuity amount, for these three lapsed years orany other penalty for not paying the gratuity, on their own, during the full and final.
Awaiting your response, with anticipation.
Thanks,
Ritu
From India, Bangalore
My answers to the queries are ;
1)The two and half months period for which your father was in hospital on sickness ground shall be treated as part of the continuous service.
2) The claim for gartuity is not time barred as the law of limitation is not applicable to it.The company cannot deny the claim on this ground as it is under obligation under law to pay teh gratuity to the nominee of teh deceased employee.
3) the company has to pay the gratuity under law to the person anmed as nominee in the nomination form and is liable to pay interest at the rate applicable.
B.Saikumar
Mumbai
From India, Mumbai
1)The two and half months period for which your father was in hospital on sickness ground shall be treated as part of the continuous service.
2) The claim for gartuity is not time barred as the law of limitation is not applicable to it.The company cannot deny the claim on this ground as it is under obligation under law to pay teh gratuity to the nominee of teh deceased employee.
3) the company has to pay the gratuity under law to the person anmed as nominee in the nomination form and is liable to pay interest at the rate applicable.
B.Saikumar
Mumbai
From India, Mumbai
Ms.Deepika Please see my reply in this column on the formula of gartuity calculation. B.Saikumar
From India, Mumbai
From India, Mumbai
Thank you Sir, for all your help.
I am waiting to hear back from my father's employer on the decision regarding gratuity payout. I'll let you know the outcome. And incase they eny it, on any grounds, then will also seek for your help on the next course of action it will require.
Thanks a lot.
Sincere regards,
Ritu
From India, Bangalore
I am waiting to hear back from my father's employer on the decision regarding gratuity payout. I'll let you know the outcome. And incase they eny it, on any grounds, then will also seek for your help on the next course of action it will require.
Thanks a lot.
Sincere regards,
Ritu
From India, Bangalore
Dear friends,
I would like to clarify on Gratuity in the event of death of an employee in service. In the event of death, no. of years is to be taken till he attains the superannuation age. For Ex: A employees age is 30 and he has put up 5 years service and died due to unforeseen circumstances. The total no. of years for gratuity is to be calculated for 33 years(if the age of superannuation is 58 years) Recently In our orgn. we paid accordingly to an employee who died at the age of 42 years. As per Sec. 4A every employer has to obtain Insurance Policy in the prescribed manner for his liability for payment towards gratuity under this act, from LIC or any other prescribed insurer. In case of death of an employee, the policy works out like an usual Life Insurance policy
As per Sec. 4(c) of the Payment of Gratuity Act completion of continuous service of five years shall not be necessary where the termination of employment of any employee is due to death or disablement.
The Gratuity calculations: No. of years x Basic+DAs x15/26.
G.K.Manjunath
Sr. Manager-HR
From India, Bangalore
I would like to clarify on Gratuity in the event of death of an employee in service. In the event of death, no. of years is to be taken till he attains the superannuation age. For Ex: A employees age is 30 and he has put up 5 years service and died due to unforeseen circumstances. The total no. of years for gratuity is to be calculated for 33 years(if the age of superannuation is 58 years) Recently In our orgn. we paid accordingly to an employee who died at the age of 42 years. As per Sec. 4A every employer has to obtain Insurance Policy in the prescribed manner for his liability for payment towards gratuity under this act, from LIC or any other prescribed insurer. In case of death of an employee, the policy works out like an usual Life Insurance policy
As per Sec. 4(c) of the Payment of Gratuity Act completion of continuous service of five years shall not be necessary where the termination of employment of any employee is due to death or disablement.
The Gratuity calculations: No. of years x Basic+DAs x15/26.
G.K.Manjunath
Sr. Manager-HR
From India, Bangalore
Dear Mr Manjunath
Calculation need to be done only on the actual years of swrvice and not upto retirement age.
Some companies take policy to cover upto retirement age in case of death. The clause making it mandatory to take a policy with LIC of India has not been notified and hence has not come into effect. Evn this clause does not contemplate payment upto retirement age in case of death
However, I wish all organisations take such policy to provide more benefit for the family in case of employees death
Whereever I woked, we took similar policy
Sivasankaran
From India, Chennai
Calculation need to be done only on the actual years of swrvice and not upto retirement age.
Some companies take policy to cover upto retirement age in case of death. The clause making it mandatory to take a policy with LIC of India has not been notified and hence has not come into effect. Evn this clause does not contemplate payment upto retirement age in case of death
However, I wish all organisations take such policy to provide more benefit for the family in case of employees death
Whereever I woked, we took similar policy
Sivasankaran
From India, Chennai
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