Entitled Gratuity: Didn't get your bonus? Here’s what to do

A portion of your "cost to the company" (CTC) is always set aside for gratuities when you start a new job. However, not every job termination will result in a gratuity payment. That's because of the regulations around gratuity payments. When an employee has worked for an employer for 4 years, 240 days, they are entitled to gratuity, some of which is deducted directly from their CTC. The firm usually has no issues with the timely payment of the gratuity, but in certain situations, there may be issues. What recourse does an employee have in this case if their employer refuses to pay the gratuity to which they are legally entitled?

What Is Gratuity?
An employee's gratuity is a part of their income that is not included in their regular paycheck but is instead given to them in a lump amount when specific criteria are met. Everything having to do with gratuities is governed by the Payment of Gratuity Act, 1972.

Unlike Provident Fund contributions, which are taken out of every paycheck, gratuity is not taxed to the recipient. However, based on whether or not one is protected by the Gratuity Act, a determination of whether or not one is free from income tax is made.

Have you not received your gratuity? Here's what to do
A formal notification to your employer is the first step you can do. If your employer still refuses to pay the gratuity to which you are legally entitled, you may submit a complaint with the district office of the labour commissioner. Remember that your entitlement to a gratuity is safeguarded under the Payment of Gratuity Act of 1972.

The corporation has 30 days to comply with the officer's request for payment of the gratuity to which he or she is entitled. Legal action may be considered if the corporation continues to ignore the demand. If the business owner is proven guilty, he faces a possible prison sentence of between six months and two years.

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Nonetheless, in many instances, the employer is just ordered to pay the amount, plus interest for the lapsed time period. In addition, the company will be fined for its negligence.

Some years ago, a case like this made headlines in Madhya Pradesh when the court there fined the employer Rs 1 lakh.