Gratuity Fund maintained with LIC’s premium linked policy – Employee entitled to receive only the statutory due, and not the due matured under policy.
LIC Group Gratuity - Street HR |
Group Gratuity Schemes provided by LIC and other Fund Management
Institutions are subscribed by many Employers to meet the gratuity
obligation towards their employees. An interesting question that arose
recently is whether an employee-on-superannuation is entitled to receive
the entire amount accumulated under the Policy enrolled by his
employer, or is he just entitled to the statutory amount prescribed
under the Payment of Gratuity Act.
The question has multi-dimensional issues since Section 4(5) of the
Payment of Gratuity Act enables an employer to provide and its employees
to have, benefits better than those provided under the Act. But most
Group Gratuity Schemes are entered by the Employer alone with the
Insurer, and they are normally not tri-parte agreements including the
union/employees. Besides these Schemes are formulated in such a fashion
that premium payable by the employer is linked to its statutory
obligation. Therefore, even if on papers the matured amount is higher
than the statutory due, the insurer need not transfer the excess amount
matured to the insured/employer. Similarly, if the employer defaults
payment of premiums, the insurer has no obligation to disburse gratuity
due to the employees.
Therefore, what concludes from the above discussion is that employees
are not party to Group Gratuity Schemes enrolled by Employers.
Therefore, as rational consequence, the employees are entitled not
entitled to the entire amount matured under policy, but only to what is statutorily due to them. [See
Mathew Korah v. Kaduthuruthy Urban Corporative Bank, 2013(4)KHC 497;
Nedupuzha Service Cooperative Bank v. Rugmini, 2011 (2) KHC 880;
Retnavalli v. Ambalapadu Service Cooperative Bank, 2005 KHC 988]
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