Facing Delayed payment or non- payment of Gratuity? Law under Payment of Gratuity Act.

Time Limit :

Section 7(3) of the Payment of Gratuity Rules, 1972 states that an employer shall arrange to pay the amount of Gratuity to the employee within 30 days from the date it becomes payable to the concerned employee. However, if the said amount of gratuity payable under sub-section (3) is not paid by the employer within the 30-day period, 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.

Therefore, in the event of delay of payment of gratuity amount by the employer, beyond the prescribed period of 30 days of determining the amount, the employee becomes eligible to receive simple interest from the concerned employer, at a rate that the Central Government notifies at the time.

Procedure
1. As per Rule 7(1) of the Payment of Gratuity (Maharashtra) Rules, 1972 an employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, ordinarily within 30 days from the date of the gratuity became payable, in Form ‘I’ to the employer.

  1. If an employer fails to pay due gratuity even after the receipt of application in Form-I, the claimant employee or his nominee or legal heir, may within 9 days of the occurrence of the cause for the application, should apply to the Controlling Authority for issuing direction to the employer under Section 7(4) of the Act, to release the amount of gratuity payable.
  2. After conducting the enquiry as prescribed, the Controlling Authority will determine the amount payable and direct the employer to make the payment.
  3. If the employer fails to comply with the direction the Controlling Authority can direct the Collector to recover the amount due and pay to the applicant employee.

Penalties under The Payment of Gratuity Act ;

Section 9 (1) of the Act  states – Whoever, for the purpose of avoiding any payment to be made under this Act or enabling any other person to avoid such payment of gratuity, knowingly makes or causes to be made any false statement or false representation, shall be punishable with imprisonment for a term which may extend to 6 months, or with fine which may extend to Rs 1000/-, or with both.

(2) An employer who contravenes, or makes default in complying with, any of the provisions of this Act or any rule or order made thereunder, shall be punishable with imprisonment for a term which may extend to 1 year, or with fine which may extend to Rs 1000/-, or with both

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