My employee in Dwarka 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 certain conditions are met, and it is calculated based on the employee's last drawn salary and years of service.

The key points regarding gratuity calculation and eligibility are as follows:

• Eligibility for Gratuity: An employee is eligible for gratuity if:
• They have completed a minimum of five years of continuous service with the employer.
• They resign, retire, or are terminated from service.
• In case of death or disablement, the gratuity is payable to the nominee or legal heirs irrespective of the duration of service.
• Calculation of Gratuity: The formula for calculating gratuity is:
• Gratuity = (Last drawn salary × 15/26) × Number of years of service
• Understanding the Components:
• Last drawn salary: This includes basic pay and dearness allowance (DA) but excludes other allowances.
• 15/26: This is derived from the fact that an employee is considered to work for 26 days in a month for gratuity calculation purposes.
• Payment Timeline: Gratuity must be paid within:
• 30 days of the employee's request for gratuity after resignation or termination.
• If not paid within this timeframe, the employer may be liable to pay interest as stipulated under Section 7(3) of the Payment of Gratuity Act, 1972.
• Disputes: If there is a dispute regarding gratuity eligibility:
• The employer must provide a written notice outlining the reasons for disputing the claim.
• The employee can appeal against the employer's decision to the Controlling Authority under Section 7(4) of the Payment of Gratuity Act, 1972.

In conclusion, it is essential to verify the eligibility criteria and calculation method as per the Payment of Gratuity Act, 1972, to resolve any disputes regarding gratuity claims effectively.