My employee in Jodhpur 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 calculated based on the provisions of the Payment of Gratuity Act, 1972, and is payable to employees under specific circumstances after their resignation or termination.

According to the Payment of Gratuity Act, 1972, an employee is eligible for gratuity if they have completed a minimum of five years of continuous service with the employer. Here are the key points regarding eligibility and calculation:

• Eligibility for Gratuity:
  • An employee must have worked for a minimum of five continuous years.
  • In case of death or disability, gratuity is payable regardless of the tenure.
  • Employees who resign voluntarily before completing five years are generally not eligible, unless they are covered under special provisions or are part of an organization that has its own gratuity policy extending benefits.
• Calculation of Gratuity:
  • The formula for calculating gratuity is: Gratuity = (Last drawn salary × 15/26) × Number of years of service where 15 days are taken as a basis for each completed year of service, and 26 represents the number of working days in a month.
  • Last drawn salary includes basic salary and dearness allowance, if any.
  • In the case of an employee who has worked for less than a year, gratuity is calculated on a pro-rata basis.
• Payment of Gratuity:
  • Gratuity must be paid within 30 days from the date it becomes payable.
  • If an employer delays payment beyond 30 days, they are liable to pay interest as per the Act.
• Dispute Resolution:
  • If there is a dispute regarding the payment of gratuity, the employee can file an application to the Controlling Authority under the Payment of Gratuity Act.
  • The authority will conduct an inquiry and pass an order regarding the eligibility and amount of gratuity payable.

In conclusion, it is essential to review the specific circumstances of the employee's tenure and the terms of service to determine the eligibility for gratuity accurately. Legal advice may be beneficial in complex cases.