Gratuity Payment News: If you are entitled to get gratuity after leaving your company, then it is possible that you will get more gratuity in the coming time. In the coming days, companies may have to pay more amount as gratuity to their employees. If the order passed by a Labor Commissioner of Kerala regarding gratuity calculation is considered as the basis, then this order may be heavy on the companies.
What is the whole matter
Actually, a former employee of the private sector HDFC Bank had filed a petition with the controlling authority under the Payment of Gratuity Act, 1972. The name of this employee is P V Unnikrishnan Pillai, who worked in the bank for 16 years before leaving the job in 2022. He challenged the authority by raising questions on the gratuity paid to him by HDFC Bank. While filing the petition on June 8, 2022, he said in his argument that the bank should pay gratuity not only on basic pay but also by adding personal pay. The authority responsible for ensuring compliance of the Payment of Gratuity Act 1972 is called the Controlling Authority.
Historic Order of the Authority
Accepting this argument of PV Unnikrishnan Pillai, the Controlling Authority asked HDFC Bank to pay him an additional amount of Rs 7.22 lakh along with 10 per cent simple interest. This is in addition to the gratuity amount of Rs 5.95 lakhs already paid by the bank. This order had come only in July 2022 last year, but the bank and the petitioner were informed about this order of the Authority on 20 January 2023. Ernakulam’s Assistant Labor Commissioner noted in his order that in relation to the salary of the petitioner, the employer has used the word personal pay and not personal allowance. All other salary components are called allowances. Therefore, gratuity will have to be paid by adding the amount of personal pay. P V Unnikrishnan Pillai argued that personal pay is part of his salary and is not an allowance.
How Gratuity is calculated
According to the Payment of Gratuity Act, to calculate the amount of gratuity, apart from basic pay, all allowances including dearness allowance are included. However, it does not include bonus, commission, house rent allowance, overtime wages and other allowances.
Experts believe that if this order is approved by the higher authority, then all the companies will have to pay more gratuity to their employees. However, HDFC Bank is preparing to challenge this order before the High Court with the Deputy Labor Commissioner.
Who gets the benefit of Gratuity
If an employee works in a company continuously for five years, then he becomes entitled to get gratuity. The companies have to pay gratuity to the employees after multiplying the amount made after adding the basic salary and dearness allowance of the last month of the job.
Read also
Get the more latest Business news updates