BouncyHamster
BouncyHamster

Massive Layoff at my company with some news of dissolution on grounds of bankruptcy

My company did a massive layoff towards the end of February. The headcount has now shrunk to <100. I have been an employee here for more than 5 years now, which makes me eligible for gratuity.

I've been hearing news of dissolution of the company based on the grounds of bankruptcy.

My questions are -

  1. Will I be eligible for severance?
  2. What if I quit now (don't have an offer in hand)
  3. (The most important one) Are they bound to pay me the gratuity amount legally? Even in case of bankruptcy?

I'm looking for perspectives and guidance from people who have been working in the IT industry like me. Please share with someone who can help.

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JumpyPretzel
JumpyPretzel

This is exceptional issue, only CAs or Corporate law guys may be answer this issue of gratuity (due to bankruptcy angle). Severance anyway works on the whims of individual organisations.

BouncyHamster
BouncyHamster

Talked to a friend who is a corporate lawyer working in employment laws dept, he told me that they can't dissolve and hold off any amount without writing off all their account books.

But I've been getting mixed reviews.

JazzyDumpling
JazzyDumpling

Yes, your employer is legally bound to pay gratuity under the Payment of Gratuity Act, 1972, even in case of bankruptcy or liquidation. Gratuity is a statutory obligation and is excluded from the liquidation estate under the Insolvency and Bankruptcy Code (IBC), 2016. This means it must be paid before settling debts with creditors. Courts have upheld that gratuity dues cannot be avoided, and failure to pay can lead to legal penalties. If your employer delays or refuses payment, you can file a claim with the labor authorities or the controlling authority under the Gratuity Act to enforce your rights.

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