Curated By: Business Desk
Last Updated: August 23, 2023, 17:32 IST
A company can never withhold the entire gratuity.
The company has the power to stop the gratuity if there’s a loss due to the negligence or unethical actions of an employee.
An employee is entitled to gratuity at a company if he has worked there for 5 years or more. Legally, the employee has the right to get a gratuity after serving there for 5 years. But in some situations, the company refuses to give the gratuity to the employee, citing certain reasons. So, let’s look at what the employee can do if a similar situation happens to them in a company and on what grounds can the company refrain from giving him the equity?
Provisions Under the Law to Withhold the Gratuity
If an employee has served under a company for 5 years or more, the company can still withhold the gratuity at the time of his resignation under 4(6b)(ii) of the Gratuity Act. This law gives the company the power to stop the gratuity if there’s a loss due to the negligence or unethical actions of an employee in the company. But before withholding the money, the company has to justify their unethical actions and negligence and must provide proper evidence.
Companies to Issue a Show Cause Notice
If a company has made an allegation against an employee for negligence or unethical action, then they have to give a show cause notice. After listening to both parties, if the employee is found guilty of negligence or any other unethical work, then the company has the right to stop their gratuity.
The Company Cannot Withhold the Entire Gratuity
Even if the employee is found guilty of negligence or unethical actions, the company can’t withhold their entire gratuity. According to the Gratuity Act and the orders of the Delhi High Court, even if an employee is found guilty of loss, the company can only withhold that much money that has been incurred by the employee due to their action. They will still have to give the rest of the amount to the employee.
What Should You Do If the Company Refuses to Give the Gratuity?
If the company refuses to give the employee their gratuity, then, first, a legal notice should be sent to the company. Even if it is not given, a complaint should be filed with the labour commissioner of the district. For the number of days the gratuity is not paid to the employee, the company will have to pay the interest as well as the penalty.
