If an employee works for five continuous years in a company, the company is required to pay a gratuity to that employee. However, there are times when companies hesitate to pay gratuities. So, what should you do if this happens? What are the rights of employees, and when can the company refuse to pay gratuity?
When Can the Company Withhold Gratuity?
If a company does not pay gratuity even after an employee has completed five years of service and is not found guilty of any wrongdoing, the employee can take legal action. The first step is to send a legal notice to the company. If the issue is still not resolved, the employee can file a complaint with the District Labor Commissioner. If the company is found guilty, it will have to pay the gratuity along with a penalty and interest.
When Can the Company Deny Gratuity?
If an employee is involved in unethical behavior or negligence that causes a significant loss to the company, the company has the right to withhold gratuity. However, the company must provide valid evidence and a proper reason before making such a decision. An investigation will be conducted before taking any action.
A company cannot withhold gratuity without a valid reason. It must first issue a show-cause notice and allow both parties to present their arguments. The gratuity will only be withheld if the employee is found guilty.
Can the Company Deduct the Full Gratuity Amount?
Even if an employee is found guilty of negligence or misconduct that caused a financial loss to the company, the company cannot withhold the entire gratuity amount. It can only deduct the amount equal to the loss suffered, while the remaining gratuity must be paid to the employee.