You can demand interest if there is delay in gratuity payment, know the rules | Live Updates, Unveiling the Latest India News Trends

New Delhi. Gratuity is generally considered a reward for loyalty. This means that if you work continuously for five years or more in a company or government job, then you are given gratuity as a reward.

But, in reality, this is not a reward for loyalty, but your right. This was clarified by the Allahabad High Court itself. The court had said in its decision that pension and gratuity are the valuable rights of every employee. This is not a reward or gift from the government.

The court had also said that if there is unnecessary delay in the payment of pension and gratuity of an employee, then he has the right to get interest on the payment. The organization will have to pay that interest also. In another decision, Allahabad High Court has also clarified that the retirement age does not matter for getting gratuity. An employee can also get it on the basis of service period only.

What is gratuity?

If an employee works in the same institution for five years or more, he becomes entitled to gratuity. Its calculation depends on the last and last years of service. If an employee becomes disabled due to accident or illness, he can get gratuity even before completing five years of service.

When will interest have to be paid?

• If you leave a job after working for five years or more, you should receive the gratuity amount within 30 days.
• Usually companies themselves give this amount along with the full and final payment. But, you can also apply for gratuity yourself.
• Your organization must disclose the amount of gratuity within 15 days of receiving the application and pay the money within 30 days.
• No company can reject your gratuity claim just because you did not apply within the prescribed time.
• If you do not get the money within 30 days, the company will have to pay simple interest along with the gratuity amount.

Gratuity will have to be paid even if one is bankrupt

An employee can get a maximum of Rs 25 lakh as gratuity. Any amount above this will be considered ex-gratia. Even if the company goes bankrupt, it will have to pay the gratuity amount. The amount of gratuity received by government employees is tax free. On the other hand, gratuity of private employees is tax free under certain conditions.