Dear Friends,
I have a query regarding Gratuity payment. Kindly please help me to make a fare result.
Details are as follows:
01. Gratuity being the pard of CTC, every month gratuity is deducted from the employees salary.
02. We formed a trust to maintain Group Gratuity scheme.
03. Now we need to deposit the amount to individual employees account.
Now my query is -
01. Some of the employees absconded/resingned without information, whos gratuity amount lays with the company. Do we need to deposit the amount to particular employees account?
02. If not required, and the concerned employee is not available, How that amount to be accounted?
03. Do we need to deposit that balance amount to labor welfare board?
Please suggest.
Hari
From India, Chennai
1I have a query regarding Gratuity payment. Kindly please help me to make a fare result.
Details are as follows:
01. Gratuity being the pard of CTC, every month gratuity is deducted from the employees salary.
02. We formed a trust to maintain Group Gratuity scheme.
03. Now we need to deposit the amount to individual employees account.
Now my query is -
01. Some of the employees absconded/resingned without information, whos gratuity amount lays with the company. Do we need to deposit the amount to particular employees account?
02. If not required, and the concerned employee is not available, How that amount to be accounted?
03. Do we need to deposit that balance amount to labor welfare board?
Please suggest.
Hari
From India, Chennai
Dear Hari ji,
My answers to your questions are as under:
01. Some of the employees absconded/resingned without information, whos gratuity amount lays with the company. Do we need to deposit the amount to particular employees account?
Ans01: Absconding employees, you need to take disciplinary action against them and terminate their services by following due process of law. After terminating their services, you need to settle their legal dues in full & final, including gratuity. You may send the amount of legal dues to them by cheque at their address last known to you. If the amount is not encashed by them, you need to show it in unpaid account.
02. If not required, and the concerned employee is not available, How that amount to be accounted?
Ans02: Answered in Ans01 above.
03. Do we need to deposit that balance amount to labor welfare board?
Ans03: Yes. You need to deposit the said amount which is shown in unpaid account for past 3 years with LWF as unpaid accumulation.
From India, Mumbai
My answers to your questions are as under:
01. Some of the employees absconded/resingned without information, whos gratuity amount lays with the company. Do we need to deposit the amount to particular employees account?
Ans01: Absconding employees, you need to take disciplinary action against them and terminate their services by following due process of law. After terminating their services, you need to settle their legal dues in full & final, including gratuity. You may send the amount of legal dues to them by cheque at their address last known to you. If the amount is not encashed by them, you need to show it in unpaid account.
02. If not required, and the concerned employee is not available, How that amount to be accounted?
Ans02: Answered in Ans01 above.
03. Do we need to deposit that balance amount to labor welfare board?
Ans03: Yes. You need to deposit the said amount which is shown in unpaid account for past 3 years with LWF as unpaid accumulation.
From India, Mumbai
Dear Mr. Korgaonkar,
I hv a doubt. Is this unpaid amount to be deposited with LWF or the Controlling Authority under PG Act? I feel the amount should be deposited with the CA under the Act. Will u pls clarify?
Rgds
From India, Mumbai
I hv a doubt. Is this unpaid amount to be deposited with LWF or the Controlling Authority under PG Act? I feel the amount should be deposited with the CA under the Act. Will u pls clarify?
Rgds
From India, Mumbai
Dear Premkumar ji,
I feel there is no provision in POG Act about depositing the unpaid gratuity amount with CA under the Act. But I am confident on unpaid gratuity for 3 years is a unpaid accumulation as defined under LWF. Still let me check it. Tomorrow I may not get time to check it. Therefore, I request that you also check it and revert.
From India, Mumbai
I feel there is no provision in POG Act about depositing the unpaid gratuity amount with CA under the Act. But I am confident on unpaid gratuity for 3 years is a unpaid accumulation as defined under LWF. Still let me check it. Tomorrow I may not get time to check it. Therefore, I request that you also check it and revert.
From India, Mumbai
Dear Hari ji,
I think you have used wrong words as ''absconding' & 'resigned without information' for the employees, who are leaving services of their own accord or without intimation.Normally the word 'absconding' is used by the Police to describe someone running from law or capture. Another word used as 'resigned without information' is also not is appropriate, because you cannot resign verbally.Once somebody has put up his resignation which has to be in writing, the same cannot be said to be without intimation. Probably you meant to say that they have left the company of their own accord without intimation.
As regards, the depositing of unclaimed amount is concerned,you need to deposit all payments due to the employee but not made to them within a period of three years from the date on which they became due with the appropriate labour department of your state.Gratuity amount is also covered under the definition of 'Unclaimed accumulation' under the Labour Welfare Act as there is not provision under any other Act including Payment of Gratuity Act,1972 to deposit the gratuity amount to particular employee's account. However before depositing the gratuity amount under Labour Welfare Act, you need to ensure that you have taken action as envisaged under Section 7 of the Payment of Gratuity Act,1972.
BS Kalsi
Member since Aug 2011
From India, Mumbai
I think you have used wrong words as ''absconding' & 'resigned without information' for the employees, who are leaving services of their own accord or without intimation.Normally the word 'absconding' is used by the Police to describe someone running from law or capture. Another word used as 'resigned without information' is also not is appropriate, because you cannot resign verbally.Once somebody has put up his resignation which has to be in writing, the same cannot be said to be without intimation. Probably you meant to say that they have left the company of their own accord without intimation.
As regards, the depositing of unclaimed amount is concerned,you need to deposit all payments due to the employee but not made to them within a period of three years from the date on which they became due with the appropriate labour department of your state.Gratuity amount is also covered under the definition of 'Unclaimed accumulation' under the Labour Welfare Act as there is not provision under any other Act including Payment of Gratuity Act,1972 to deposit the gratuity amount to particular employee's account. However before depositing the gratuity amount under Labour Welfare Act, you need to ensure that you have taken action as envisaged under Section 7 of the Payment of Gratuity Act,1972.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Dear Korgaonkar ji,
I checked up, You are right - the definition of 'Unpaid accumulation' under the Bombay Labour Welfare Fund Act means all payments due to employees but not made within a period of three years, which includes gratuity also. Thus, the amount is to be deposited with the LWB but after three years only. Thank you for giving me an opportunity for indepth study of Labour Welfare Fund Act.
However, I observe that Sub-section (3A) of the Section 7 of the POG Act states about seeking permission of the Controlling Authority for non-payment of interest for delay in payment of gratuity for no fault of employer; and sub-section 4(a) about depositing the amount with controlling authority as admitted by the employer, in case of dispute.
Can't the employer take advantage of the situation in the instant caseby seeking permission from the CA for non-payment of interest for delayed payment under the plea that the separated employee has not applied for gratuity and the concerned person is not traceable at the last known address? In any case, deposit with LWB is applicable after completion of three years only. Please comment.
Regards.
From India, Mumbai
I checked up, You are right - the definition of 'Unpaid accumulation' under the Bombay Labour Welfare Fund Act means all payments due to employees but not made within a period of three years, which includes gratuity also. Thus, the amount is to be deposited with the LWB but after three years only. Thank you for giving me an opportunity for indepth study of Labour Welfare Fund Act.
However, I observe that Sub-section (3A) of the Section 7 of the POG Act states about seeking permission of the Controlling Authority for non-payment of interest for delay in payment of gratuity for no fault of employer; and sub-section 4(a) about depositing the amount with controlling authority as admitted by the employer, in case of dispute.
Can't the employer take advantage of the situation in the instant caseby seeking permission from the CA for non-payment of interest for delayed payment under the plea that the separated employee has not applied for gratuity and the concerned person is not traceable at the last known address? In any case, deposit with LWB is applicable after completion of three years only. Please comment.
Regards.
From India, Mumbai
Dear Premkumar ji,
Many thanks to make this discussion interesting to me.
I have gone through the POG Act especially section 7. I reproduce the sub section 4(a) of section 7 as given below verbatim.
"If there is any dispute as to the amount of gratuity payable to an employee under this Act or as the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity."
According to this sub section, question of depositing the amount with Controlling Authority arises in following circumstances:
1. In case dispute as regards to amount of gratuity;
2. In case dispute as regards to admissibility of any claim; and
3. In case dispute as regards to the person entitled to receive the gratuity.
Hope the doubt is clear.
From India, Mumbai
Many thanks to make this discussion interesting to me.
I have gone through the POG Act especially section 7. I reproduce the sub section 4(a) of section 7 as given below verbatim.
"If there is any dispute as to the amount of gratuity payable to an employee under this Act or as the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity."
According to this sub section, question of depositing the amount with Controlling Authority arises in following circumstances:
1. In case dispute as regards to amount of gratuity;
2. In case dispute as regards to admissibility of any claim; and
3. In case dispute as regards to the person entitled to receive the gratuity.
Hope the doubt is clear.
From India, Mumbai
These is a rider to the comments made by mr. Kargaonkar
These answers assume that the person concerned has worked for 5 years and is eligible for gratuity. Where the person is not eligible for gratuity, then no amount needs to be paid or deposited with labour welfare fund. Just because an amount is in ctc or that you provided a group schemes for it does not make it payable in law.
Your company may decide to pay it on moral grounds, but legally it's not required where gratuity is not payable as per law,
From India, Mumbai
These answers assume that the person concerned has worked for 5 years and is eligible for gratuity. Where the person is not eligible for gratuity, then no amount needs to be paid or deposited with labour welfare fund. Just because an amount is in ctc or that you provided a group schemes for it does not make it payable in law.
Your company may decide to pay it on moral grounds, but legally it's not required where gratuity is not payable as per law,
From India, Mumbai
HALO EVERYONE
I want to inform you that Gatuity is not the PART of CTC . and the Grattutity can not be deducted from the Salary . Grattutity is payable after copmpletion of 5 years of the serive .( IF 4 Years and 6 months can be rounded off to 5yrs) .you neednot pay gratutiy either to the employee or to deposit in the labour welfare board. the amount lying in the Gratutity FUND A//C is company's liabity and it shold be shown in the co's books and at thh time of renewal of gratity a/c the sum available in the gratuity a/c can be adjuseted agaisnt the premium payable,
rgds/Meeta
From India, Mumbai
I want to inform you that Gatuity is not the PART of CTC . and the Grattutity can not be deducted from the Salary . Grattutity is payable after copmpletion of 5 years of the serive .( IF 4 Years and 6 months can be rounded off to 5yrs) .you neednot pay gratutiy either to the employee or to deposit in the labour welfare board. the amount lying in the Gratutity FUND A//C is company's liabity and it shold be shown in the co's books and at thh time of renewal of gratity a/c the sum available in the gratuity a/c can be adjuseted agaisnt the premium payable,
rgds/Meeta
From India, Mumbai
Dear Meeta ji,
Your response to the queriest is very very authoritive. You seems to be very very confident in your response. I am a member like you but still I make an attempt to submit you / ask you with humble as under:
Why you feel that Gratuity is not a part of Cost to the Company?
Who said that the Gratuity is deducted from Salary? Or, have you came across any such deduction?
Your both the sentences are contradictory to each other. What do you mean to say exactly? What is the base to it?
Can you please convience this to us?
Can you please convience us what is the gratuity a/c and what is this adjuseted?
You became a member of this forum in May 2013 and this was your first posting. I do not want to discourage you and as well other members who participate in this forum. My humble request to all the members that they should think twice before responding. They should make their own study before reply. They should read the earlier responses and analyse them.
Each one is free to express his or her own views in this forum. But this kind of responses creates different image of HR fraternity in rest of world. This statement is not pin pointed to this thread / discussion but to every such thread/ discussion.
If any one feels that I am harsh here, please condone me. I further request the administrators of the forum to delete this posting of mine immediately, if they feel so. I also did not like to respond this way.
From India, Mumbai
Your response to the queriest is very very authoritive. You seems to be very very confident in your response. I am a member like you but still I make an attempt to submit you / ask you with humble as under:
Why you feel that Gratuity is not a part of Cost to the Company?
Who said that the Gratuity is deducted from Salary? Or, have you came across any such deduction?
Your both the sentences are contradictory to each other. What do you mean to say exactly? What is the base to it?
Can you please convience this to us?
Can you please convience us what is the gratuity a/c and what is this adjuseted?
You became a member of this forum in May 2013 and this was your first posting. I do not want to discourage you and as well other members who participate in this forum. My humble request to all the members that they should think twice before responding. They should make their own study before reply. They should read the earlier responses and analyse them.
Each one is free to express his or her own views in this forum. But this kind of responses creates different image of HR fraternity in rest of world. This statement is not pin pointed to this thread / discussion but to every such thread/ discussion.
If any one feels that I am harsh here, please condone me. I further request the administrators of the forum to delete this posting of mine immediately, if they feel so. I also did not like to respond this way.
From India, Mumbai
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc