LABOUR LAW PROBLEMS

ASVINO SHEEJ

SEMESTER-6

ROLL NO- 1472

 1. Employee had service exceeding 4 year 9 months in Employer’s Bank. The
employer contended that gratuity entitlement would arise only on completion of 5
years as per the Act ( S.4) . The claim of continuous service was raised by the
employee relying on the deemed continuous service under S.2 A (2) of the Act.
Decide .

ANS-

Facts

Employee had service exceeding 4 year 9 months in Employer’s Bank and he contended that
gratuityentitlement would arise only on completion of 5 years as per the Act (S.4). He
claimed continuous service was raised by the employee relying on the deemed continuous
service under S.2 A (2) of theAct.

Issues

Can he claim continuous service was raised by the employee relying on the deemed
continuous service under S.2 A (2) of the Act.

Analysis

He finished 4.9 years which means in the fifth year he worked 270 days which is more than
240 days therefore he eligible to claim continuous service. As per the said section of Section
2A(2) of the payment of gratuity Act, for said period of one year, if employee during the
period of 12 calendar months preceding date with reference to which calculation is to be
made, has actually worked under employer for period of at least 190 days in case of
employee employed below ground in mine or in an establishment which works less than six
days a week and 240 days in other cases.

2. Employer received a cheque of Rs 5,36,567 / towards gratuity from LIC to be paid

to the retired employee. The date of termination of service of employee is June
2009. Employer released Rs 3.5 lakhs to the employee keeping in view his
entitlement, upto the maximum limit of Rs 3.5 lakhs fixed under the Act. Employee
filed writ petition for seeking direction to the employer to pay him the full amount
received from LIC. It is allowed by single judge. Hence the employer filed a writ
appeal against the order. Note: the maximum limit was Rs 3.5 lakhs prior to 2010
Amendment, 10 lakhs prior to 2018 Amendment and presently Rs 20 lakhs. Decide.

ANS-
 Facts

Employer received a cheque of Rs 5,36,567 / towards gratuity from LIC to be paid to the
retiredemployee. The date of termination of service of employee is June 2009. Employer
released Rs 3.5lakhs to the employee keeping in view his entitlement, upto the maximum
limit of Rs 3.5 lakhs fixed under the Act. Employee filed writ petition for seeking direction to
the employer to pay him the full amount received from LIC

Issues

Is employee entitled to receive the full amount of 5,36,567 received by LIC

Analysis

The maximum limit was 3.5 lakhs in June 2009 and employer can deduct gratuity only when
it exceeds but here in this case where the Gratuity amount exceeds the Exemption Amount
as calculated under section 10(10) of the Act, otherwise no.If Gratuity is received by any
employee while in employment then it is fully taxable in the hands ofemployee. While if
gratuity is received in case of death or retirement or resignation, then exemption is available
up to the following limits: Therefore, employer can deduct the rest of the amount and
employee is only entitled to 3.5 lakhs and not more than that.

3. An employee applied for three month leave for the purpose of visiting his friends
and relative and later applied for special leave for two years for taking up
employment in UAE . Initially three months leaves was allowed but the subsequent
application was objected stating that employee has not complied with circular
applicable to employees while undertaking foreign travel and he was asked to
report to duty but he resigned. The employer decided to recover the dues from
employee out of the gratuity . Absence from employment without compliance with
the circular was interpreted as wilful omission from duty causing loss to the
employer. Decide.

ANS-
Facts

An employee applied for three month leave for the purpose of visiting his friends and
relativeand later applied for special leave for two years for taking up employment in UAE.
Initiallythree months leaves was allowed but the subsequent application was objected
stating that employee has not complied with circular applicable to employees while
undertaking foreign travel and he was asked to report to duty but he resigned.
The employer decided to recover the dues from employee out of the gratuity. Absence from
employment without compliance with the circular was interpreted as wilful omission from
duty causing loss to the employer.Decide.

Issue

Whether the employer can recover the dues from employee out of the gratuity ?

Analysis

Section 4 (6) of the Act permits an employer to forfeit gratuity payable to an employee in
thecertain circumstances. As per the said provision:

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;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. As per the section 4(6) of The Payment
of Gratuity Act the forfeiture of gratuity is possible fully or to the extent of amount as
misappropriated and  Only in the case of termination of employment by way of dismissal on
account of any one or all of the misconducts enumerated in clauses (a) or (b) of ss (6) of
sec.4.  In the absence of termination order containing any of the above allegations, the
gratuity of an employee cannot be forfeited. Here Employer can’t withhold dues from
employee out of gratuity.