Gratuity when company acquired by another company

No amount is deducted in the account of "gratuity" which is governed by Payment of Gratuity Act, 1972 and payment shall be made in terms of Section 4 of the Act which reads as:

Section: 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:

Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.]

Explanation. : For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he, was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days wages based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account.:

Provided further that in the case of [an employee who is employed in a seasonal establishment and who is riot so employed throughout the year], the employer shall pay the gratuity at the rate of seven days wages for each season.

Explanation: In the case of a monthly rated employee, the fifteen days wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand] rupees.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

(6) Notwithstanding anything contained in sub-section (1), -

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.

(b) the gratuity payable to an employee may be wholly or partially forfeited] -

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

(7) [***]

Thank you very much Sir for the clear explanation 

Yes, you are entitled for gratuity. For more informed discussion, the query could be posted at citehr.com.

Dear querist

1. In your query you have mentioned that you have been working for 12 years in a software company.

2. A gratuity is a monetary gift given to employees who have worked for a company for at least five years continuously. All payments are protected by the Payment of Gratuity Act of 1972, and employers have the option of paying it out of their own pocket or choosing a gratuity insurance provider.

3. Payment of Gratuity Act 1972 is applicable to every factory, mine, oilfield, plantation, ports, railway company, every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in state in which ten or more persons are employed, or were employed on any day of the preceding 12 months. (Sec 1 of the Payment of GratuityAct 1972). Ideally the Payment of Gratuity Act 1972 should be applicable to software company in which you have worked until and unless it is a case where less than ten  persons were employed

4. To answer your question, I will be elaborating on sec. 4 of the act: Section: 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.

5. What constitutes continuous service Is governed by Section 2A of the Payment of Gratuity Act,1972. You can check up your case whether it is a case of continuous service of five years as per the provisions of Section 2A of the Payment of Gratuity Act,1972 given under this linkhttps://indiankanoon.org/doc/1503989/

6. It is not known as to if any of the forms viz Form ‘F’, Form “G’ have been submitted by you to your employer in terms of Rule 6(1) and Rule 6(3) of the Payment of Gratuity (General) Rules, 1972.

7. Notwithstanding the same, what you require to do immediately is apply to your employer within Thirty days of the gratuity becoming payable on Form ‘I’ under the provisions of Rule 7(1) the Payment of Gratuity (General) Rules, 1972.You can download the Form ‘I’ from the link given below https://www.advocatekhoj.com/library/legalforms/rules/index.php?Pno=paymentofgratuity.php

8. Within 15 days of the receipt of the application under rule 7 of the said rules for payment of gratuity, the employer :-

a) Shall issue a notice on Form ‘L’ to the applicant employee if the claim is found admissible (Rule 8(1)(i) of the said rules)

b) In case, if the claim for gratuity is not found admissible, the employer will issue a notice on Form ‘M’ to the applicant employee.(Rule 8(1)(iI) of the said rules)

c) In either case, a copy of the notice shall be endorsed to the controlling authority.

9. In case, your employer refuses to entertain your application filed under provisions of Rule 7(1) the Payment of Gratuity (General) Rules, 1972, you can file an application to the Controlling Authority. The claimant employee within Ninety days of the occurrence of the cause for the application, apply in Form ‘N’ to the controlling authority. Form N can be downloaded from the link given in para 7 above.

10. In Delhi, all the Assistant Labour Commissioners and labour officers in the Labor Department have been appointed Controlling Authority under the payment of Gratuity Act 1972 and all the Deputy Labour Commissioners have been appointed Appellate Authority under the Act. Similarly, same could be the situation of appointment of Controlling Authority and Appellate Authority in Other States which you may like to check in the state where you were working.

As per your contention, you have been working continuously for 12 years in the same company.

It is not your problem that your company was acquired by another company, since your employment continued under the new management also, which clearly recognises your length of service all through the previous company to the present company thenceforth.

Therefore you are entitled tol claim gratuity for 12 years of continuous service put with the company.

Your employer cannot deny gratuity stating that the gratuity was not deducted from your salary.

Payment of gratuity amount is not out of the amount deducted from your salary and it is illegal to deduct an amounbt towards gratuity from your salay. 

As per gratuity act an employee has put in a continuous service of five years to claim gratuity. If any amount is deducted from monthly salary of the employee towards gratuity by the employer, it is illegal.

If you have worked for five years or more, then you are entitled to gratuity. Since you have worked for 12 years, definitely you are entitled to gratuity (assuming that your company has 10 or more employees). 

Your HR is intentional or due to lack of knowledge misguiding you. Grauity amount cannot be deducted from salary unlike ESI/ PF. So question of non-payment of gratuity due to non-deduction does not even make any sense legally. They are coming up with these lame excuses just to avoid payment. Since gratuity is a statutory payment it also does not matter whether it is mentioned in the appointment letter or not. 

Demand gratuity before the management in Form I and wait for 30 days.

If there is no response, file an application in Form N before the Controlling Authority under the Act. Check with your local labour commissioners office.