Employer Must Determine And Notify Gratuity Within 30 Days: Madhya Pradesh High Court

Jabalpur (Madhya Pradesh): The Madhya Pradesh High Court has passed a judgement stating that it is employer’s obligation under Payment of Gratuity Act 1972 to determine the gratuity amount and notify both the employee and the Controlling Authority within 30 days of gratuity becoming payable.

In the case of Little World Higher Secondary School vs. The State of Madhya Pradesh and Others, the Court held that Sections 7(2) and 7(3) of the Act are independent provisions that impose an immediate duty on the employer to pay gratuity once it “becomes payable,” regardless of whether the employee has submitted an application under Section 7(1).

The double bench, comprising Justice Suresh Kumar Kait and Justice Vivek Jain, emphasized that the employer’s obligation to pay gratuity does not depend on any application filed by the employee who has exited employment.

The employee’s application is merely a reminder to the employer of their statutory duty and not a precondition for payment. The Court noted that Section 7(2) requires the employer to determine the gratuity amount and notify both the employee and the Controlling Authority within 30 days of gratuity becoming payable, while Section 7(3) mandates payment within the same period.

The case arose when a school teacher, employed from 2001 to 2011, was denied gratuity despite qualifying service. After filing an application before the Controlling Authority under Section 7(4), the authority directed the school to pay gratuity with 10% interest from the date of exit.

The school argued that the application was barred by limitation under the Madhya Pradesh Payment of Gratuity Rules, which require claims within 30 days of gratuity becoming payable.

However, the Court rejected this, holding that the limitation in the Rules cannot override the substantive right under the Act and that no claim should be invalidated solely for delay. The Court concluded that the employer is not an adjudicating authority and cannot delay payment by demanding prior application or adjudication.

The ruling reinforces employees’ constitutional right under Article 300-A to gratuity as a property right. The appeal was dismissed, affirming the payment of gratuity and interest to the employee within 30 days if not already paid.

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