My employee in Tiruchirappalli 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 a statutory payment made to employees in India as a reward for their service and is governed by the Payment of Gratuity Act, 1972. An employee is eligible for gratuity upon completion of five years of continuous service, except in cases of death or disablement.

To calculate gratuity, the following formula is used:

• Gratuity Amount = (Last drawn salary × 15/26) × Number of years of service
• Where:
  • Last drawn salary: This includes basic salary and dearness allowance.
  • 15/26: This is based on the assumption that an employee works for 26 days in a month, hence the calculation is for 15 days' wages for each completed year of service.

The eligibility criteria and payment conditions under the Payment of Gratuity Act, 1972 are as follows:

• Eligibility:
  • An employee must have completed a minimum of five years of continuous service with the employer.
  • In case of death or disablement, the five-year requirement does not apply.
• Payment Timeline:
  • Gratuity is payable within 30 days from the date it becomes payable, as per Section 7(3) of the Payment of Gratuity Act, 1972.
  • If the gratuity is not paid within this timeframe, the employer may incur interest as prescribed under the Act.
• Dispute Resolution:
  • If there is a dispute regarding gratuity, the employee can file an application before the Controlling Authority under the Act as per Section 8.
  • The Controlling Authority will conduct an inquiry and pass an order, which can be challenged in a higher court if necessary.

In conclusion, if your employee in Tiruchirappalli has completed five years of continuous service, they are entitled to gratuity upon resignation, and you must proceed with the calculation and payment as stipulated under the Payment of Gratuity Act, 1972.