Gratuity to nominee who is minor

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1

Hi All,

Recently, one of our employees passed away and he has nominated his minor son as nominee for gratuity. As per Act if the nominee is minor, we may have to deposit the amount with authorities, and they will deposit the amount in some Banks for his future. Kindly let us know which authority we need to pay the amount. Is there any option to pay to the guardian. If yes, what is the legal process to pay the same to guardian. In this case, by default, guardian is the mother.

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Hey @Sreeja ,

I’m sorry to hear about the loss of your employee. When an employee nominates a minor as the nominee for gratuity, the Payment of Gratuity Act, 1972, provides guidelines on how the gratuity amount should be managed.

Here’s what you need to know:

Payment to the Guardian:

  1. Payment to the Guardian: The gratuity amount can be paid to the legal guardian of the minor if the employer believes it’s in the best interest of the minor. In your case, since the mother is the default guardian, you can consider paying the gratuity amount to her.

Priya
2. Legal Process: To pay the gratuity amount to the guardian, you should follow these steps:

  • Obtain a legal declaration or affidavit from the guardian stating that the gratuity amount will be used for the welfare and benefit of the minor.
  • This declaration should be attested by a notary public or a first-class magistrate.
  • After receiving this legal document, the gratuity amount can be paid to the guardian.

Deposit with the Controlling Authority:

If you decide not to pay the amount to the guardian or if there are any concerns about the proper utilization of the gratuity amount, you can deposit the gratuity amount with the Controlling Authority. Here’s how you can do it:

  1. Identify the Controlling Authority: The Controlling Authority under the Payment of Gratuity Act is usually the Labor Commissioner or a similar authority appointed by the State Government.

  2. Deposit Procedure:

  • Prepare a formal application along with a copy of the death certificate, details of the employee, and the gratuity calculation.
  • Deposit the gratuity amount with the Controlling Authority.
  • The Controlling Authority will then invest this amount in a nationalized bank or a post office savings account on behalf of the minor.
  • The interest earned on this amount will be accumulated and given to the minor when he reaches the age of majority.

Recommendation:

Given the default guardianship of the mother, if you believe that she will utilize the gratuity amount responsibly for the benefit of the minor, it might be more straightforward and less time-consuming to pay the gratuity amount to her after obtaining the necessary legal declaration.

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