Financial crisis can’t be reason for non -payment of gratuity- Court

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Financial crisis can't be reason for non -payment of gratuity- Court
TOI | In separate orders, the court said that an employee expects and deserves as a matter of right, some reward after a long meritorious service the gratuity will have to be paid with 10% interest.

Financial crisis can’t be reason for non -payment of gratuity- Court

According to a TOI report, Labour Court of Mumbai has said that financial crisis cannot be grounds for non-payment of gratuity.

The Court has come to the rescue of a dozen BEST (Brihanmumbai Electric Supply & Transport Undertaking) employees and issued the order to hand over the amounts ranging from Rs 30 lakh to 10 lakh.

Times of India report says, In separate orders, the court said that an employee expects and deserves as a matter of right, some reward after a long meritorious service the gratuity will have to be paid with 10% interest.

One of the applicants, Mohammad Ansari, who worked with Brihanmumbai Electric Supply & Transport Undertaking from 1984 to 2019, told the court that he submitted an application under the Payment of Gratuity Act for around Rs 30 lakh, but got no response. His plea said that till October 2016

As per the provisions under the Act, the BEST used to pay the gratuity amount to the retiring employees within one month from the date of the superannuation from service.

The undertaking, however, submitted that it was facing a service financial crisis due to revenue losses, and this had resulted in the increase of deficit. It also said that there was a mismatch in its income and expenditure.

In another case, The High Court of Karnataka has held that the payment of gratuity would not depend upon the employee filing an application before the employer demanding gratuity but it will have to be paid immediately on cessation of the employment.

The gratuity will have to be paid immediately by the employer on cessation of employment in terms of Section 4 of the Payment Gratuity Act, 1972, irrespective of the demand by the employee, the Court said.

Also Read : Gratuity has to be paid immediately after an employee quits: High Court

Justice M. Nagaprasanna passed the order while rejecting the contention put forward on behalf of two companies – Varma Industrial Pvt Ltd., Bengaluru, and IBC Knowledge Park Pvt Ltd., Bengaluru – that an employee is required to make application for payment of gratuity.

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