Sir,
I served a 'Steel and Ferro Alloy Company managed college' as a faculty in chemistry for 8.5 years. After my resignation, though PF was promptly cleared, I was not paid the gratuity. As a result of my long fight, at last, in the last month, after 13.5 years, the gratuity amount was paid but without interest. My repeated representations made them to pay 10% simple interest. Am I not eligible for compound interest as the delayed period is 13.5 years? The gratuity amount was 31,875/- and simple interest @10% was 43,345/-.Please quote case history or the relevant sections under gratuity act of 1972.(One case history says, never interest should exceed the gratuity amount!)
From India, Mumbai
I served a 'Steel and Ferro Alloy Company managed college' as a faculty in chemistry for 8.5 years. After my resignation, though PF was promptly cleared, I was not paid the gratuity. As a result of my long fight, at last, in the last month, after 13.5 years, the gratuity amount was paid but without interest. My repeated representations made them to pay 10% simple interest. Am I not eligible for compound interest as the delayed period is 13.5 years? The gratuity amount was 31,875/- and simple interest @10% was 43,345/-.Please quote case history or the relevant sections under gratuity act of 1972.(One case history says, never interest should exceed the gratuity amount!)
From India, Mumbai
Pls refer serction 7 iof gratuity act
7. Determination of the amount of Gratuity.- (1) A person who is eligible
for payment of gratuity under this Act or any person authorised, in writing, to act
on his behalf shall send a written application to the employer, within such time
and in such form, as may be prescribed, for payment of such gratuity.
(2) As soon as gratuity becomes payable, the employer shall, whether an
application referred to in sub-section (i) has been made or not, determine the
amount of gratuity and give notice in writing to the person to whom the gratuity
is payable and also to the controlling authority specifying the amount of gratuity
so determined.
1[(3) The employer shall arrange to pay the amount of gratuity within thirty
days from the date it becomes payable to the person to whom the gratuity is
payable.
(3-A) If the amount of gratuity payable under sub-section (3) is not paid by
the employer within the period specified in sub-section (3) the employer shall
pay, from the date on which the gratuity becomes payable to the date on which it
is paid, simple interest at such rate, not exceeding the rate notified by the
Central Government from time to time for repayment of long term deposits, as
that Government may, by notification specify:
Provided that no such interest shall be payable if the delay in the payment is
due to the fault of the employee and the employer has obtained permission in
writing from the Controlling Authority for the delayed payment on this ground].
The employer is required to pay simple intrest only not compound intrest
From United States
747. Determination of the amount of Gratuity.- (1) A person who is eligible
for payment of gratuity under this Act or any person authorised, in writing, to act
on his behalf shall send a written application to the employer, within such time
and in such form, as may be prescribed, for payment of such gratuity.
(2) As soon as gratuity becomes payable, the employer shall, whether an
application referred to in sub-section (i) has been made or not, determine the
amount of gratuity and give notice in writing to the person to whom the gratuity
is payable and also to the controlling authority specifying the amount of gratuity
so determined.
1[(3) The employer shall arrange to pay the amount of gratuity within thirty
days from the date it becomes payable to the person to whom the gratuity is
payable.
(3-A) If the amount of gratuity payable under sub-section (3) is not paid by
the employer within the period specified in sub-section (3) the employer shall
pay, from the date on which the gratuity becomes payable to the date on which it
is paid, simple interest at such rate, not exceeding the rate notified by the
Central Government from time to time for repayment of long term deposits, as
that Government may, by notification specify:
Provided that no such interest shall be payable if the delay in the payment is
due to the fault of the employee and the employer has obtained permission in
writing from the Controlling Authority for the delayed payment on this ground].
The employer is required to pay simple intrest only not compound intrest
From United States
Dear Anonymous,
I endorse Mravimtnl.
According to amendment 1987, if the amount of gratuity due to any person is not paid by employer in 30 days, the employer is required to pay simple interest till the date of payment. Central Govt. has fixed the rate of simple interest at 10 % pa.
In Ramakant Manjrekar Vs. NTC Ltd. 2004 III CLR 626 (MUM HC) it is held that the petitioner is entitled to simple interest @ 10 % pa.
From India, Mumbai
I endorse Mravimtnl.
According to amendment 1987, if the amount of gratuity due to any person is not paid by employer in 30 days, the employer is required to pay simple interest till the date of payment. Central Govt. has fixed the rate of simple interest at 10 % pa.
In Ramakant Manjrekar Vs. NTC Ltd. 2004 III CLR 626 (MUM HC) it is held that the petitioner is entitled to simple interest @ 10 % pa.
From India, Mumbai
Sir(s),
Thanks for your response.
In my query, my emphasis was on the inordinate delay of 13.5 years. Your answers never bothered about it. If the company has to pay only 10% simple interest, irrespective of purposeful delay, no company will pay with in 30 days. The very purpose of gratuity is lost.
One case history says, the district collector is authorised to collect the amount "gratuity amount with compound interest" and the same is paid to the employee. There should be a clear verdict, when to pay simple interest and when to pay with compound interest. The company should be levied a penalty for non compliance of labour laws, with out which, such cases are bound to happen; to-day it happened with me, and tomorrow it may happen with you or with some one else.
The big brains of HR should ponder over this petty issue.
From India, Mumbai
Thanks for your response.
In my query, my emphasis was on the inordinate delay of 13.5 years. Your answers never bothered about it. If the company has to pay only 10% simple interest, irrespective of purposeful delay, no company will pay with in 30 days. The very purpose of gratuity is lost.
One case history says, the district collector is authorised to collect the amount "gratuity amount with compound interest" and the same is paid to the employee. There should be a clear verdict, when to pay simple interest and when to pay with compound interest. The company should be levied a penalty for non compliance of labour laws, with out which, such cases are bound to happen; to-day it happened with me, and tomorrow it may happen with you or with some one else.
The big brains of HR should ponder over this petty issue.
From India, Mumbai
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