My employee in Meerut 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 an employee's tenure and salary, and it is payable under the Payment of Gratuity Act, 1972, provided certain conditions are met.

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 same employer. Here are the key points regarding the calculation and eligibility for gratuity:

• Eligibility:
  • An employee must complete at least five years of continuous service.
  • Eligibility arises upon resignation, retirement, or termination (other than due to misconduct).
  • In case of the employee's death or disablement, gratuity is payable irrespective of the five-year condition.
• Calculation of Gratuity:
  • The formula for calculating gratuity is: Gratuity = (Last drawn salary × 15/26) × Number of years of service
  • Here, the "last drawn salary" includes basic salary and dearness allowance (DA).
  • The factor 15/26 comes from the assumption that a month consists of 26 working days.
• Payment Timeline:
  • Gratuity must be paid within 30 days from the date of eligibility.
  • If there is a dispute, the employer is obliged to pay the gratuity amount, and any disputes can be resolved subsequently.
• Disputes:
  • If you dispute the eligibility, you can file an application to the Controlling Authority under the Payment of Gratuity Act.
  • The authority will adjudicate the matter and provide a ruling based on evidence and documentation.

Additionally, it is essential to refer to Section 4 of the Payment of Gratuity Act, which outlines the payment of gratuity, and Section 7, which details the procedure for determining claims. Ensure that you maintain proper records of employment duration and salary to substantiate your position regarding the gratuity claim.