My employee in Panipat 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 employee's last drawn salary and the duration of their service, and it is payable under specific conditions as stipulated in the Payment of Gratuity Act, 1972.

The key aspects of gratuity calculation and eligibility are as follows:

• Eligibility: According to Section 4 of the Payment of Gratuity Act, 1972, an employee is eligible for gratuity if they have completed at least five years of continuous service with the employer, except in the case of death or disablement, where the period of service requirement does not apply.
• Calculation: Gratuity is calculated using the formula: (Last drawn salary × 15/26) × Number of years of service, where 'last drawn salary' refers to the basic salary plus dearness allowance. The fraction 15/26 is derived from the fact that gratuity is calculated for 15 days of salary for each completed year of service, and there are 26 working days in a month.
• Payment Timeline: As per Section 7 of the Act, gratuity must be paid within 30 days from the date it becomes payable. If there is a delay, the employer is liable to pay interest as per the provisions of the Act.
• Disputes: If there is a dispute regarding the eligibility or amount of gratuity, the employee can file an application before the Controlling Authority under the Payment of Gratuity Act, as per Section 8. The authority will adjudicate the matter.
• Exemptions: Certain establishments, such as those employing less than 10 persons or those not covered under the Act, may be exempt from paying gratuity. Additionally, specific employees may not qualify based on the nature of their employment or the terms of their contract.

It is crucial to maintain proper documentation and records of the employee's tenure and salary to facilitate accurate calculation and compliance with the legal requirements. If your company disputes the eligibility, ensure you have valid grounds supported by the provisions of the Act.