An employee challenges a termination
A dismissed employee raises a dispute. How a clean paper trail changes the position.
Read the scenario →Illustrative example
A gratuity claim after a long serving employee leaves
An employee who completed years of service claims gratuity, and the employer had never planned for it.
Scenario type: Textile trading business. This is a hypothetical example, not a real client.
The situation
A long serving employee resigns and claims gratuity. The employer believed the business was too small to owe it and never set money aside.
The challenges
- Uncertainty about whether the law applies to this establishment
- No provision in the accounts for the liability
- The calculation method is not clear to either side
How it is typically handled
- 1Check whether the Act applies based on headcount history
- 2Work out the amount using the prescribed formula and last drawn wages
- 3Respond to the claim and, if due, pay within the required time
- 4Set up a yearly provision so future exits are planned for
What a good outcome looks like
The claim is answered on the law and the numbers. The business begins tracking accrued gratuity instead of meeting it as a surprise.
Key takeaways
- Check applicability early, not at the exit
- Provide for gratuity in the books each year
- Late payment can attract interest
This scenario is general information for illustration. Rules, thresholds and deadlines change and depend on your facts, so confirm the position for your own situation with a qualified professional.
Labour Law Litigation
Dealing with something like this?
Leave your details and we will call you back within one business day. Read about labour law litigation.
More scenarios
Keep reading
A former employee claims unpaid wages
A claim for pending salary and dues reaches the Labour Commissioner's office.
Read the scenario →A brand name that turned out to belong to someone else
A founder finds a similar registered mark days before launch and has to decide whether to rebrand or proceed.
Read the scenario →