Employer’s Duty Regarding the Payment of Gratuity

Determination of the amount of gratuity by the employer

As soon as gratuity becomes payable, the employer shall, whether the application for the payment of gratuity has been given or not by the employee, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling officer specifying the amount of gratuity so determined.

The employer shall arrange to pay the amount of gratuity within 30 days from the date of its becoming due/payable to the person to whom it is payable.

Interest on gratuity amount

If the amount of gratuity payable is not paid by the employer within the period specified i.e. 30 days, 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 the Government may, by notification specify.

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.

Notice for payment of gratuity

1. Claim for gratuity found to be admissible

If the claim for gratuity is found admissible on verification, the employer shall issue a notice in Form ‘L’ to the applicant employee, nominee or legal heir, as the case may be, specifying the amount of gratuity payable and fixing a date, not being later than the 30th day after the date of receipt of the application, for payment thereof, or

2. If the claim for gratuity is not found admissible

Employers shall issue a notice in Form M’ to the applicant employee, nominee or legal heir, specifying the reasons why the claim for gratuity is not considered admissible.

3. Issue of notice to the applicant

In either of the cases, within 15 days of the receipt of an application for the payment of gratuity, the notice has to be issued by the employer to the applicant employee, nominee or legal heir, along with a copy endorsed to the controlling authority.

4. A claimant is a nominee/ legal heir

If the claimant for gratuity is a nominee or a legal heir, the employer may ask for such witness or evidence as may be deemed relevant for establishing his identity or maintainability of his claim. In that case, the time limit specified for issuance of notices shall be operative with effect from the date such witness or evidence, called for by the employer is furnished to the employer.

5. Service of notices on the applicant

The notices on Form ‘L’ or ‘M’ shall be served on the applicant either by personal service after taking receipt or by registered post.

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