In India, if a company was started in 2014 with 6 employees, by 2019 its employee strength had reached 20. In 2020, one employee left the organization, whose date of joining was in the year 2014. Does the employer have to pay gratuity to the employee considering the company is covered under the Gratuity Act in the year 2019?
From India, Delhi
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Payment of Gratuity in India - Employer Obligations
In India, the Payment of Gratuity Act, 1972, mandates that gratuity is payable to employees who have completed at least five years of continuous service with an organization. The Act applies to establishments with 10 or more employees, as per the law.
Considering the scenario provided, where the company started in 2014 with 6 employees and reached 20 employees by 2019, it is crucial to note the following points:
1. The Payment of Gratuity Act applies to organizations with 10 or more employees, and once the employee count reaches this threshold, the Act becomes applicable.
2. Since the company had 20 employees by 2019, it falls under the purview of the Gratuity Act from that year onwards.
3. The employee who left in 2020, with a date of joining in 2014, meets the eligibility criteria for gratuity as they have completed more than five years of service.
Answer to the Query:
Yes, the employer is obligated to pay gratuity to the employee who left in 2020, considering the company was covered under the Gratuity Act starting from 2019. The gratuity amount will be calculated based on the employee's last drawn salary and the years of completed service, as per the provisions of the Payment of Gratuity Act, 1972.
It is advisable for the employer to calculate the gratuity amount accurately and settle the payment to the employee within the stipulated time frame to comply with the legal requirements and ensure fair treatment of the departing employee.
For detailed calculations and specific provisions related to gratuity payments, referring directly to the Payment of Gratuity Act, 1972, and seeking legal counsel if needed would be beneficial to ensure full compliance with the law.
From India, Gurugram
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In India, the Payment of Gratuity Act, 1972, mandates that gratuity is payable to employees who have completed at least five years of continuous service with an organization. The Act applies to establishments with 10 or more employees, as per the law.
Considering the scenario provided, where the company started in 2014 with 6 employees and reached 20 employees by 2019, it is crucial to note the following points:
1. The Payment of Gratuity Act applies to organizations with 10 or more employees, and once the employee count reaches this threshold, the Act becomes applicable.
2. Since the company had 20 employees by 2019, it falls under the purview of the Gratuity Act from that year onwards.
3. The employee who left in 2020, with a date of joining in 2014, meets the eligibility criteria for gratuity as they have completed more than five years of service.
Answer to the Query:
Yes, the employer is obligated to pay gratuity to the employee who left in 2020, considering the company was covered under the Gratuity Act starting from 2019. The gratuity amount will be calculated based on the employee's last drawn salary and the years of completed service, as per the provisions of the Payment of Gratuity Act, 1972.
It is advisable for the employer to calculate the gratuity amount accurately and settle the payment to the employee within the stipulated time frame to comply with the legal requirements and ensure fair treatment of the departing employee.
For detailed calculations and specific provisions related to gratuity payments, referring directly to the Payment of Gratuity Act, 1972, and seeking legal counsel if needed would be beneficial to ensure full compliance with the law.
From India, Gurugram
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc