My employee in Agartala has claimed gratuity after resignation but my company is disputing the eligibility; how is gratuity calculated and when is it payable?

Detailed Legal Analysis

Gratuity is payable to an employee under the Payment of Gratuity Act, 1972, provided they meet certain eligibility criteria, which includes having worked for a minimum of five years with the employer. The gratuity amount is calculated based on the employee's last drawn salary and the duration of their service.

Here's a breakdown of how gratuity is calculated and the conditions for its payment:

• Eligibility Criteria:
  • Employee must have completed a minimum of 5 years of continuous service with the employer.
  • Gratuity is payable upon resignation, termination, retirement, or death or disablement due to accident or disease.
  • Employees who leave service due to voluntary retirement under a scheme are also eligible.
• Calculation of Gratuity:
  • The formula for calculating gratuity is: Gratuity = (Last drawn salary x 15/26) x Number of years of service.
  • Here, "last drawn salary" refers to the basic salary plus dearness allowance.
  • The factor of 15/26 is used to account for 15 days' wages for each completed year of service, based on a 26-day working month.
• Payment Timeline:
  • Gratuity must be paid within 30 days from the date it becomes payable.
  • If an employer fails to make the payment on time, they may be liable to pay interest as per the provisions of Section 7(3) of the Payment of Gratuity Act, 1972.
• Dispute Resolution:
  • In case of a dispute regarding gratuity, the employee can file an application before the controlling authority as per Section 8 of the Payment of Gratuity Act, 1972.
  • The controlling authority is responsible for adjudicating disputes concerning the payment of gratuity.

In Agartala, as in the rest of India, adherence to the Payment of Gratuity Act, 1972, is crucial for both employers and employees to ensure fair treatment and compliance with labour laws. Employers should carefully review the eligibility criteria and ensure timely payment to avoid legal complications.