Gratuity reimbursement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2017 Dear Expert,

I have a query regarding the Gratuity Act and wanted to know if one of my colleague is eligible for the same.
He has already completed 6 years in our company and we have almost 40-50 people on our payroll. Our employer says we have not deducted any Gratuity amount from your salary, therefore employees are not eligible for Gratuity once they leave. Is there a form which we need to sign to be eligible or there has to be deductions for one to become eligible.?
Is there any way I can fight with employer to provide him Gratuity, Our salary has base components like Basic, HRA, Conveynce,medical & other and deductions are only against TAX, there is no PF or ESI from employer as well.

Please help on this query urgently....

Regards,

CA CS Jainam Shah

CA CS Jainam Shah (Expert)
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12 April 2017 The Payment of Gratuity Act, 1972 is applicable to the following:

every factory, mine, oilfield, plantation, port and railway company;

every shop or establishment within the meaning of any law in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

Gratuity amount is not to be deducted from the employee's salary. It is a gratuitous gift from the employer to the employee for completing 5 years of continuous service and no amount from the salary is to be deducted for gratuity. Every year, the company has to create a liability, a provision for payment of gratuity. In some companies, they assign the allocation of gratuity in the hands of a insurance company. But nowhere the gratuity amount comes from the pocket of the employee.

Remedy in Case the Employer Does Not Pay Gratuity

If the amount of gratuity is not paid by the employer within the prescribed time to the person entitled thereto, the aggrieved person should make an application to the Controlling Authority under the Payment of Gratuity Act within the area where the employer's establishment is situated or where the employee was working at the time of termination. The controlling authority shall issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto.