Gratuity — Nomination — Labour Law II Notes

Gratuity — Nomination

Gratuity is often paid after a worker dies. So the law asks him, while he is alive and well, one simple question: if this money is paid after you are gone, who should receive it? His written answer — the nomination — saves his family a court fight later.

Who nominates, when, and in whose favour

Nomination is governed by Section 55:

Who and when — every employee who has completed one year of service must make a nomination, in the prescribed form, within the prescribed time.
In whose favour — the nomination must be made in favour of one or more members of the employee’s family. A nomination in favour of a non-family member is void if the employee has a family; it is valid only where he has no family. If a family is acquired later (e.g. on marriage), any earlier nomination becomes void and a fresh nomination in favour of the family must be made.
Change and effect — the employee may modify the nomination at any time. On his death, the gratuity is paid to the nominee; if the nominee has predeceased him, the interest passes as prescribed.

Section 55, Code on Social Security 2020 (in brief): “each employee, who has completed one year of service, shall make … a nomination … [and] if an employee has a family … the nomination shall be made in favour of one or more members of his family, and any nomination made … in favour of a person who is not a member of his family shall be void.”

In Simple Terms: After one year, the worker names who gets his gratuity if he dies. It must be a family member (unless he has no family), it can be changed any time, and a new family (marriage, children) cancels the old nomination.

🧩 WORKED EXAMPLE — nomination and later marriage

Facts. An unmarried employee nominates his friend for gratuity, then marries two years later.

Rule. A nomination for a non-family member is valid only while the employee has no family; acquiring a family voids it and requires a fresh nomination in the family’s favour (s.55).

Apply. The nomination of the friend was valid when made (no family), but the marriage created a family, so it became void; he must nominate his wife/family.

Conclusion. The friend’s nomination lapses on marriage; the employee must file a fresh nomination in favour of his family.

flowchart TD
    ROOT["Gratuity nomination (s.55)"]:::root
    ROOT --> WHEN["After 1 year of service, in prescribed form"]:::leaf
    ROOT --> WHO["In favour of FAMILY members"]:::leaf
    WHO --> NOFAM["No family? may nominate others"]:::leaf
    WHO --> LATER["Family acquired later -> old nomination VOID, make fresh"]:::no
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef no fill:#FBE3E3,stroke:#a11,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

State of Punjab v Labour Court, Jullundur (1979) — the Payment of Gratuity Act is a complete, self-contained code; gratuity and its payment (including to the nominee) are governed wholly by the Act and its nomination scheme.

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