Interest Receivable For Delayed Gratuity Payment

The interest Rate to be applied on delayed payment of gratuity is 10%.

Employees who do not receive their gratuity within 30 days (from the date on which it becomes payable) are entitled to get the money along with simple interest from the due date to the date of actual payment, the Madras High Court Bench here has said.

Dismissing a writ petition filed by Arumuganeri Salt Workers' Cooperative Production and Sale Society in Tuticorin district, Justice K. Chandru said that the 30-day time frame would begin from the due date and not from the date of a positive order passed by the controlling authority under the Payment of Gratuity Act. The judge directed the petitioner society to pay interest at the rate of 10 per cent to one of its former employees who had resigned his job in June, 2003, without driving him further to any other forum. He held that that the appellate authority under the Act had rightly ordered payment of interest from 2003. Initially, A. Rajan, who was employed in the society on a daily-wage basis for six years, had filed an application before the controlling authority.

It was allowed with a direction to the society to pay the gratuity amount of Rs.9,692 within 30 days failing which it must be paid along with interest. Subsequently, the employee filed an appeal claiming that he was paid only the gratuity amount.

Allowing his appeal, the Appellate authority ordered to pay interest at the rate of 10 per cent from the date on which the gratuity became due till the date on which it was paid. The society had filed the present writ petition contending that it paid the amount within 30 days of the order passed by the controlling authority and hence it was not obliged to pay interest. “

Source: 17th Sep 2010 – The Hindu