Respected seniors
This is Ramu, Working as a Jr.Manager-HR in a Private Manufacturing organisation at Vijayawada. I have query on gratuity payment. Recently one of our employee met with an road accident while attending the duties and died on the spot. He served the company just 4 months only. Is he eligible for gratuity under death case even though he has less than one year service.
I requested the seniors kindly give your suggesstion
With regards
Ramu
From India, Vijayawada
5This is Ramu, Working as a Jr.Manager-HR in a Private Manufacturing organisation at Vijayawada. I have query on gratuity payment. Recently one of our employee met with an road accident while attending the duties and died on the spot. He served the company just 4 months only. Is he eligible for gratuity under death case even though he has less than one year service.
I requested the seniors kindly give your suggesstion
With regards
Ramu
From India, Vijayawada
Hi Ramu,
Would like to quote the section 4 of the Payment of Gratuity Act, 1972.
4. Payment of Gratuity - (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease;
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement;
Hope, it will be cleared now...
From India, Chennai
Would like to quote the section 4 of the Payment of Gratuity Act, 1972.
4. Payment of Gratuity - (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease;
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement;
Hope, it will be cleared now...
From India, Chennai
Hi Ramu
As per the provisions contained in Payment of Gratuity Act 1972, the gratuity is payable for the services rendered only. How ever contineous five years service is not necessary in case of Death. Here in your case, you legally not required to pay gratuity as the person under reference has rendered only 4 months service. However service period of 6 month or more is considered as one full year while calculating gratuity, you assume as he has rendered one year service & pay the gratuity as good gesture. If you have made Gratuity trust with L I C of India then the Insurance company will calculate his gratuity as if he has rendered services up to 58 years of age. For this you have to inform to Insurance co with certain documents. -SDP.,
From India, Kolhapur
As per the provisions contained in Payment of Gratuity Act 1972, the gratuity is payable for the services rendered only. How ever contineous five years service is not necessary in case of Death. Here in your case, you legally not required to pay gratuity as the person under reference has rendered only 4 months service. However service period of 6 month or more is considered as one full year while calculating gratuity, you assume as he has rendered one year service & pay the gratuity as good gesture. If you have made Gratuity trust with L I C of India then the Insurance company will calculate his gratuity as if he has rendered services up to 58 years of age. For this you have to inform to Insurance co with certain documents. -SDP.,
From India, Kolhapur
Dear SDP,
In my opinion the Gratuity paid by LIC is also based on provisions of the Gratuity act and the agreement entered between LIC and the employer. The employer submits the list of employees with their date of joining and based on this data LIC does an actuarial valuation and intimates the employer the fund that needs to be maintained in the trust. Any shortfall in the fund has to be made good by the employer. LIC makes the Gratuity payment to the extent of the fund available against the employer's contribution to the fund. LIC collects a risk premium on the fund payable by the employer and based on this only LIC pays the gratuity as if the employee has rendered service till his 58 years in case the employee dies whilst in service with the employer. Moreover, LIC processes the claim only based on a request from the employer and in this case the employer may not be in a position to submit the claim owing to the fact that he is not eligible as per provisions of the Gratuity Act.
In this case I feel LIC may not entertain because he has not fulfilled the conditions laid down under the Gratuity act for eligibility. However, if the employee is covered under PF act, he can approach PF under the Employees Deposit Linked Insurance (EDLI). Alternatively if the employer has obtained an exemption from PF and holds the liablity with LIC of India then LIC ,may process the claim through the employer.
M.V.Kannan
From India, Madras
In my opinion the Gratuity paid by LIC is also based on provisions of the Gratuity act and the agreement entered between LIC and the employer. The employer submits the list of employees with their date of joining and based on this data LIC does an actuarial valuation and intimates the employer the fund that needs to be maintained in the trust. Any shortfall in the fund has to be made good by the employer. LIC makes the Gratuity payment to the extent of the fund available against the employer's contribution to the fund. LIC collects a risk premium on the fund payable by the employer and based on this only LIC pays the gratuity as if the employee has rendered service till his 58 years in case the employee dies whilst in service with the employer. Moreover, LIC processes the claim only based on a request from the employer and in this case the employer may not be in a position to submit the claim owing to the fact that he is not eligible as per provisions of the Gratuity Act.
In this case I feel LIC may not entertain because he has not fulfilled the conditions laid down under the Gratuity act for eligibility. However, if the employee is covered under PF act, he can approach PF under the Employees Deposit Linked Insurance (EDLI). Alternatively if the employer has obtained an exemption from PF and holds the liablity with LIC of India then LIC ,may process the claim through the employer.
M.V.Kannan
From India, Madras
Dear SDP.
You are getting good res. on your query, its good all are supportive on this site.
Please first check the employees was a permanent employee of your organisation. If he was a permanent employee, then you will have to pay his gratuity upto the age of 58 years.
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement;
From India, Mumbai
You are getting good res. on your query, its good all are supportive on this site.
Please first check the employees was a permanent employee of your organisation. If he was a permanent employee, then you will have to pay his gratuity upto the age of 58 years.
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement;
From India, Mumbai
Dear Ramu,
This case doesn't fall under the eligible category of GRATUITY, whether temporary or permanent. The eligibility of Gratuity starts after completion of 5 years of complete service.
Regards
Biplab
From India, Delhi
This case doesn't fall under the eligible category of GRATUITY, whether temporary or permanent. The eligibility of Gratuity starts after completion of 5 years of complete service.
Regards
Biplab
From India, Delhi
Dear Ramu HR,
I appreciate the reply of Pragnaa HRCS and Shri. S D Patil and suggest you and other members of this forum to recommend the LIC Gratuity Scheme to their management. This scheme takes care of your Gratuity liability out of the corpus managed by it on your behalf.
The corpus is managed by LIC from the amount you contribute towards this scheme. This contribution is work out the actuaries on behalf of LIC on the basis of data provided by you in respect of your employees, on basis of various parameters.
Total corpus comprising of amount contributed by you and interest credited by LIC is available for claim settlement. LIC has been offering very competitive and consistent interest rates over the years. For the year 2009-10, LIC has offered 9.00% to 9.65% depending on fund size. The interest declared is net of administrative expenses incurred, hence no separate charges are charged after crediting the interest.
Just think over, where you get interest of 9.00% to 9.65% and that too with tax benefit?
There is a very important salient feature in this Gratuity Scheme with LIC which provides for insurance coverage to the employees to the tune of future service gratuity with nominal extra premium for this.
Dear Ramu HR, if you would have contributed for this scheme, definitely you would have got number of blessings from the family members of deceased employee and also from other employees of you.
From India, Mumbai
I appreciate the reply of Pragnaa HRCS and Shri. S D Patil and suggest you and other members of this forum to recommend the LIC Gratuity Scheme to their management. This scheme takes care of your Gratuity liability out of the corpus managed by it on your behalf.
The corpus is managed by LIC from the amount you contribute towards this scheme. This contribution is work out the actuaries on behalf of LIC on the basis of data provided by you in respect of your employees, on basis of various parameters.
Total corpus comprising of amount contributed by you and interest credited by LIC is available for claim settlement. LIC has been offering very competitive and consistent interest rates over the years. For the year 2009-10, LIC has offered 9.00% to 9.65% depending on fund size. The interest declared is net of administrative expenses incurred, hence no separate charges are charged after crediting the interest.
Just think over, where you get interest of 9.00% to 9.65% and that too with tax benefit?
There is a very important salient feature in this Gratuity Scheme with LIC which provides for insurance coverage to the employees to the tune of future service gratuity with nominal extra premium for this.
Dear Ramu HR, if you would have contributed for this scheme, definitely you would have got number of blessings from the family members of deceased employee and also from other employees of you.
From India, Mumbai
Dear Ramu HR,
I wish to add further that similar scheme is available with other insurance companies also.
It is you liability to make payment of gratuity as the the law and you need to make provisions in your books of accounts every year towards your liability. This liability is to be worked out by actuaries on your behalf. This means you need to appoint actuaries for this purpose.
If you contribute for such scheme with any of the insurance companies, appointment of actuaries and making provisions in books of accounts is taken care of automatically.
From India, Mumbai
I wish to add further that similar scheme is available with other insurance companies also.
It is you liability to make payment of gratuity as the the law and you need to make provisions in your books of accounts every year towards your liability. This liability is to be worked out by actuaries on your behalf. This means you need to appoint actuaries for this purpose.
If you contribute for such scheme with any of the insurance companies, appointment of actuaries and making provisions in books of accounts is taken care of automatically.
From India, Mumbai
Respected Korgaonkar K A
If the company is not having LIC scheme then, Please guide all of us in this matter, The employee is elegible for Gratuity or not and upto when his family will get the Gratuity, please give the calculation for this matter, I think it will help to all of us (Members of this site)
From India, Mumbai
If the company is not having LIC scheme then, Please guide all of us in this matter, The employee is elegible for Gratuity or not and upto when his family will get the Gratuity, please give the calculation for this matter, I think it will help to all of us (Members of this site)
From India, Mumbai
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Payment of Gratuity Act, 1972 & The Rules.ppt
THE PAYMENT OF GRATUITY ACT 1972.doc