I have worked for an MNC in India for 6.5years and has been transferred to the companies HQ in Germany in 2018. I initially had a fixed term contract with the company in Germany for 2 years then it was extended for 6months and later another year which will come to an end by March 2022. I have put down my resignation and the company in Germany accepted my resignation stating my last working day would be March 31 2022. During this period of time I was receiving salary from German company. Since Germany and India has agreements on Social security my PF was paid in India through my HR in my parent company While coming to Onsite I have signed an agreement that I shall return back to my parent company after the assignment and If I breach this I need to pay them 2 month salary and additional allowances what they have spent on me, I would like to have a smooth relationship with the company so I am Ok to pay this amount but if I calculate my Gratuity according to last drawn salary In Germany then this amount comes more that the amount what i need to pay them as I have completed 10 years and 3 months of service in total. Till date my HR in my parent company did not reply anything back regarding my resignation. What should I do now? Just leave without asking anything to HR or Mail him to make my full and final settlement with experience letter What if he says the Gratuity is only payable for the initial 6.5years of service in parent company? (because he hinted this in a discussion) Thank You in Advance for your guidance!!
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If you have continuously worked without break-in-service for 10 years and 3 months', then you will be entitled for gratuity for the entire period.
As you have rightly suggested, mail a letter to HR of the Company to get you gratuity for the entire service alongwith experience letter. If the Company refuses to pay for the entire service and pays only for 6.5 years, then file a case against the Company in the jurisdictional Labour Court/Civil Court, as the case may be.
The Basic pay will be salary I receive in Germany, Is that correct understanding?
Salary includes only Basic pay + DA.
After serving for more than 10 years, it is not advisable to forgo the gratuity earned which will be a good corpus. Please negotiate with your employer to get a better bargain within the framework of terms of employment.
Request company to make payment in full and final settlement and give you your experience letter
Request company to pay your gratuity for 10 years you have worked
Your understanding is correct
Send a legal notice to them through an advocate seeking explanation
Since you were on the rolls of your parent company in India who had been paying your PF regularly even while you were employed in Germany, it can be deemed that you were on deputation to the German company during your course of employment with your parent company, therefore you can claim gratuity for the entire period of service i..e., 10 and half years.
Rest other things can be followed up by you as per the employment offer letter conditions
If you claim that you were in your parent company during the entire tenure of youir employment for the purpose of gratuity then you may have to apply for the pay scale as per your company here in India because the tenure at Germany may be termed as period of deputation.
However nothing prohibits you from claiming the gratuity based on the salary received at Germany
- As per Specific Relief Act, if any employee quits before the notice period, the Employer can only recover the Notice pay, and the Company cannot force to serve the entire notice period.
- Further, the resignation decision is the employee’s decision, and the employer cannot sue for breach of contract, if the employee leaves without serving contractual notice.
- Further, no employer can refused to return the original certificates or to issue relieving letter and gratuity if any .If they are doing so, their act is illegal, unjustified and against the fundamental rights of the employee.
- Further, the employment bond with the negative covenant is valid and legally enforceable, if the parties agree with their free consent i.e. without force, coercion, undue influence, misrepresentation and mistake, but it is not enforceable, if it is either one sided, unconscionable or unreasonable.
- Hence, the said company is bound to pay the gratuity and it is an offence to hold this amount of any employee
- Send a legal demand notice for seeking full settlement and gratuity amount with the experience letter.
Dear client,
I understand that you want to maintain a smooth relationship with your company and in light of that, it is the best to be transparent and communicate any or every concern that you have. Therefore, send a follow up mail to your HR and make him address your concerns. In regards to the Gratuity, I'd advise you to negotiate with them and attain clarity regarding the issue.
Turning to the basic pay, ideally it must be the salary that you receive in Germany. However, your company might have a different understanding regarding this so its best for you to have a direct conversation with them and clear all your doubts. This will not only smoothen your relationship with them, but will also help you in attaining clarity regarding everything.
Thank you.
Dear Team, Thank You for the quick answers, I would like to give an update about the situation and also ask a suggestion about next steps. As per most of your suggestion I have Contacted my HR and paid the amount stated in my contract (Rs 4.5lakhs) for breaching the agreement and after discussion my HR agreed that the company will pay Gratuity for 10 years (my complete service) but the Basic pay will be calculated from the salary what I have received in Sep 2018 in India before coming to Germany. If we calculate the gratuity according to this salary it sums up to Rs 1.5lakhs. I asked my HR why it is not my German salary as my PF was paid in India according to German Salary (12% of my German Salary both Employer and Employee Contribution) If we calculate gratuity according to my German salary it will be more than Rs 20lakhs. My HR told that, please think practically how it is possible for a company to pay Rs 20lakhs by getting only Rs4.5 lakhs as penalty. I understand the logical part of it but i would like to know is it legally correct that my company has to calculate the gratuity according to the salary what i received in Sep 2018? Additional information is there is nothing written regarding the gratuity payment in the contract what I have signed before coming to Germany. Please advice!
You should be entitled to gratuity as per your German salary as even your PF was paid as per German salary
It should be calculated as per last drawn salary
The payment of gratuity act, 1972(amended 2018), governs gratuity payment in India.
The basic eligibility for gratuity payment is an employee has uninterruptedly rendered his services for that period.
The uninterrupted definition includes services that have been discontinued due to several conditions.
These includes sickness, leave, accident, absence sans leave provided establishment does not mark such absence as break from employment.
In your situation even though you have been sent to Germany, there was no break in service and your service has been reckoned as continuous and uninterrupted services which can be evidently seen from the deductions towards PF and other statutory deductions from your salary payment during the period of employment at Germany too.
For the sake of convenience, the employers can refer to the specific formulas mentioned in the Payment of Gratuity Act, 1972 when calculating the gratuity amount.
The formula is expressed as follows :
Gratuity = N*B*15/26
N = number of years of service in a company
B = last drawn basic salary plus DA;
Thus your employer has to pay gratuity as per the last salary drawn by you irrespective of the fact whether it was in India or in a foreign country.
If the salary last draw Was equal to INR 20,00,000/- then the employer has to pay the basic salary and dearness allowance components of the said salary for number of years that you served your employer.
You have repaid the amount towards breach of contract hence there is no question of deduction of the same from gratuity payment.
You are not begging the employer neither he is showing any sympathy towrds you by paying the gratuity amount.
He is obliged to pay the same as per subsisting rules.
If your employer refuses to pay the gratuity amount as per your eligibility, you can drag him to court of law for recovery of the same.
The HR is not the authority neither your employer is an authority to decide about the quantum of gratuity payment to you.
They are bound by the Indian laws in this regard hence they cannot compare anything with the payment of gratuity amount to reduce the same.
You can resort to legal action if your requests falls on the deaf ears of the employer.
After asking the above questions to my HR he told that my employment with the company in India is over by Sep 2018. So paying Gratuity for 10 years itself is a special bonus approval from my MD. When I said that the EPFO COC states the following ´´Joint undertaking by the employer and employee: We hereby undertake that : The employer shall continue to contribute in respect of this employee in India during the period of posting abroad during which time the employer-employee reletionship shall be maintained. The employer shall inform EPFO about any change in the employment status/secondment of the posted employee during the currency of this certificate. The Employee shall inform EPFO,about any loss/theft of this Certificate. The Employee and Employer shall be jointly and separately responsible for the misuse of any kind, of the Certificate of Coverage, If any. My HR told that they have already got a exemption certificate from EPFO stating that I am not an employee in India and I am only an Employee of Germany and the PF is being paid only in the interest of employee. My HR told that the legal advisor of the organization has clearly told to pay only the gratuity only until Sep 2018 Please advice!
Ask your organisation to forward legal opinion of the legal advisor
The Company's HR is not an authority neither he is competent enough to pass on such orders.
The company being in India, has to follow the law of the land.
You do not stretch your conversations with the HR unnecessarily neither you pass on more information to the HR which may educate the HR more and enable him/her to cause more damages/harm to you.
You can approach high court with a writ of mandamus seeking direction to the employer to pay the correct gratuity amount to you to which you are entitled based on the documentary evidences you may provide before court, until then you pretend to be silent over this issue with your employer.
You need to send a legal notice and later file a complaint
Dear Client,
If you apply for EPF withdrawal online, then you don't need to seek your employer for verification. Additionally, to be able to claim withdrawal online, you must have your PAN and Aadhaar linked with your UAN account. In case the Previous Account was maintained by PF Trust of the exempted establishment, the member should submit a physical Transfer Claim Form (Form 13) to the Trust while submitting Online Transfer Claim Form (Form 13) to the PF Office for transferring the service details under the Pension Fund to the new account.
Thanks & Regards