You are entitled to gratuity, but the company did not pay the money...where can you complain?

If you work for a company, you receive a variety of financial benefits in addition to your salary. One of these is gratuity. This is a reward given by the company to the employee for their long service. It is commonly said that you become eligible for gratuity after working for a company for 5 consecutive years. However, few people know that even if you work for a company for 4 years and 240 days (i.e., 4 years and 8 months), you are still eligible for gratuity. This is considered a full 5 years of service, and the employee is paid gratuity based on the 5 years.

Now, suppose you have worked for a company for 5 years or 4 years and 240 days, but the company still refuses to pay you gratuity. What would you do? There is no need to panic in such a situation. The Payment of Gratuity Act, 1972, gives employees the right to receive their gratuity. If your gratuity is withheld without reason, you have the right to take action against the company. Learn what you can do:

1. Right to Send a Legal Notice to the Employer
If an employee is entitled to gratuity, but the company delays or refuses to pay it, this is considered a direct violation of the Payment of Gratuity Act, 1972. In such a case, the employee has the right to send a legal notice to their employer (company).

What is in a Legal Notice?
This notice contains the employee's request for gratuity from the company and explains why they are entitled to it (e.g., the number of years they served the company). It provides a specific timeframe (such as 15 or 30 days) within which the company must pay the gratuity. This is the first and most important step that formally informs the company of your rights.

2. If the notice doesn't work...
If the company doesn't resolve the employee's issue even after sending a legal notice and the gratuity amount isn't paid, the employee has the next legal recourse. In such cases, the employee can file a complaint against the company with the District Labor Commissioner.

The Labor Commissioner's Role
The Labor Commissioner handles such cases and hears both parties (employee and company). He investigates the case under the Payment of Gratuity Act. If the company is found guilty and proven to have illegally withheld gratuity, the company must not only pay the gratuity amount, but may also be subject to penalties and interest. This interest is charged from the date the gratuity was due.

3. How long does it take to receive gratuity?
To receive gratuity, an employee must apply to their employer after leaving their job. According to the rules, after applying for gratuity, the employer must deposit the gratuity amount into the employee's bank account within 30 days.

4. The 5-Year Rule Does Not Apply
If an employee dies while employed, the entire amount deposited in their gratuity account is paid to their nominee (Gratuity Nominee). In such cases, the requirement of a minimum 5-year service period does not apply. Even if the employee has worked for just one year, if they die, their nominee is paid the entire gratuity. This rule is designed to provide financial security to the employee's family in the event of an unexpected misfortune.

5. In this situation, the company may withhold gratuity payments.

Gratuity is an employee's legal right, but the company may have the right to withhold gratuity payments under certain circumstances:

Unethical behavior or negligence: If an employee is accused of unethical behavior (such as fraud or theft), or if their gross negligence has caused significant financial loss to the company, the company has the right to withhold their gratuity.

Evidence and Show-Cause Notice: However, to withhold gratuity, the company must first present strong evidence and a reason. The company must issue a show-cause notice to the employee regarding the reason given.

Hearing and Decision: After this, both parties (employee and company) are heard. Gratuity payments will only be withheld if the employee is found guilty. However, even in such circumstances, the company will deduct only the amount of the loss suffered. The company cannot withhold the entire gratuity if the amount of loss is small. This rule maintains a balance so that companies do not suffer unnecessary losses and the rights of employees are also not violated.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.