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Gratuity has to be paid after employee quits: HC

BENGALURU: Gratuity has to be paid immediately on cessation of employment, irrespective of demand, the high court said while upholding the order passed by the assistant labour commissioner and appellate authority under Payment of Gratuity Act.

The payment doesn’t depend on the employee (https://timesofindia.indiatimes.com/topic/employee) filing an application for the same, the court said.

In the order passed on September 4, 2017, Verma Industrial Private Limited and IBC Knowledge Park Private Limited were directed to pay Rs 3,94,615 along with 10% interest to their former employee PN Janakiraman Shetty.

While Verma Industrial Private Limited was directed to pay interest on delayed payment of gratuity, IBC Knowledge Park Private Limited was told to pay interest on gratuity.

Both the companies challenged the order, claiming they hadn’t received any application from Shetty regarding gratuity payment in ter ms of rule 7 of the Karnataka Payment of Gratuity Rules, 1973.

However, Justice M Nagaprasanna said such an argument cannot be accepted since various court judgments on the issue clearly show gratuity has to be paid immediately on cessation of employment.

Shetty worked from 1971 till 2002 in Verma Industrial Private Limited, then oined IBC Knowledge Park Private Limited as a fresh employee and was there till January 15, 2015, the court was told.

He submitted a representation on May 30, 2015 and on June 2, 2015. Verma Industrial Private Limited settled his gratuity for 31 years of service, but didn’t pay interest.

Shetty then moved the controlling authority under the Payment of Gratuity Act for payment of interest as well as gratuity from the company (IBC Knowledge Park Private Limited) where he worked last.

Source: TOI