# Company not paying gratuity? Losses are no excuse > Gratuity, provident fund and pension are a retired employee's right, to be paid at retirement. - Topic: Workplace - Court: Supreme Court of Pakistan - Citation: C.P.L.As. Nos. 573-K to 575-K of 2023 - The myth: "If the company is in loss, it can make you wait for your gratuity." Verdict: Wrong: the Supreme Court said non-payment of gratuity has nothing to do with losses. - Watch: https://failegal.site/media/company-not-paying-gratuity-losses-no-excuse-2025 (video https://failegal.site/media/company-not-paying-gratuity-losses-no-excuse-2025/reel.mp4, 1:09) - Published by FAI Legal on 2026-11-11 A company's losses are no excuse to hold back your gratuity. On 2 September 2025 the Supreme Court of Pakistan said: "The non-payment of gratuity has nothing to do with losses or financial crunch", and every employer must pay at retirement. It set aside a High Court judgment that had refused retired officers' benefits because the company was losing money. The case went back to the High Court to decide every claim on the law, preferably within three months (para 10). How much you get still depends on your own rules: the Court said gratuity becomes a legal obligation depending on the terms of employment (para 6). ## Key points - Losses are no excuse: "The non-payment of gratuity has nothing to do with losses or financial crunch, quite the reverse, the amount of gratuity, provident fund and pension is an inherent/vested right of every retired employee which is deep-seated in the Industrial Relations and Civil Service Laws." (para 5). - Pay at retirement: "Every employer without any pretext or deferment is bound to pay off this liability immediately on the eve of retirement rather than delaying or shelving this vested right for an indefinite period or result in this obligation in a state of uncertainty." (para 5). - A judgment that refused benefits because the company was in loss was set aside: the plea of financial crunch "does not suffice to compromise, negate or deprive the accrued dues if payable in accordance with law" (para 6). - Not a favour: where rules or the law structure it, gratuity's payment "turns into indispensable and mandatory rather than considering it mere bounty." (para 6). - The claims go back to the High Court, to be decided in accordance with law, preferably within three months (para 10). ## Company not paying gratuity: the short answer Your company says it is in loss, so your gratuity must wait. That is not the law. The Supreme Court of Pakistan held on 2 September 2025 that "every employee is entitled to the payment of his full and final settlement on his superannuation." and that non-payment of gratuity has nothing to do with losses (para 5). People search this as what to do if company is not paying gratuity, gratuity not paid by employer and can a company not pay gratuity. Who is entitled to gratuity in the first place (it depends on the job and the rules) is on our page failegal.site/media/gratuity-private-employees-pakistan-workman-2021-scmr-1785. ## Karachi: officers of a big state company Officers and employees of a big state company in Karachi, some of them recently retired, went to the Sindh High Court (the first petition in 2017). They challenged the withholding of their financial benefits, including increments and promotions, and amendments to the company's Gratuity Rules that paid them gratuity on basic pay while employees represented by the union were paid on gross pay (para 2). Their counsel said the refusal to pay since 2009 was illegal and discriminatory (para 3). Before the Supreme Court their claims were listed: "the petitioners raised multifarious claims such as non-payment of gratuity; unlawful amendments in the gratuity rules; non-payment of special allowance and ad-hoc allowance." (para 5). ## 2017 to 2023: the High Court said no On 16 January 2023 the Sindh High Court dismissed the petitions. As the Supreme Court read it, the officers were not turned away on any constitutional or legal ground; the High Court observed that since the company was suffering financial loss, it was not conducive to grant them any financial benefits (para 5, referring to para 11 of the High Court's judgment). The company's side told the Supreme Court about its financial crunch: it had applied for permission to close down, had retrenched employees with the Labour Court's permission, kept only 900 in service, and offered a Voluntary Separation Scheme (para 4). ## We checked it in FAI Legal The judgment is on FAI Legal's Judgment Search, marked as a citation from the court record and binding, with every paragraph open in the judgment reader. The paragraphs quoted on this page are paras 2 to 6 and 10. ## September 2025: nothing to do with losses The Supreme Court (Muhammad Ali Mazhar, Athar Minallah and Salahuddin Panhwar, JJ) disagreed with the High Court's reason: "The non-payment of gratuity has nothing to do with losses or financial crunch, quite the reverse, the amount of gratuity, provident fund and pension is an inherent/vested right of every retired employee which is deep-seated in the Industrial Relations and Civil Service Laws." (para 5). It added: "Every employer without any pretext or deferment is bound to pay off this liability immediately on the eve of retirement rather than delaying or shelving this vested right for an indefinite period or result in this obligation in a state of uncertainty." (para 5). The High Court had not decided the officers' legal points, so its judgment was also hit by the doctrine of sub silentio (para 5). The petitions became appeals and were allowed: "the impugned judgment passed by the High Court is set aside and the matter is remanded to the High Court to decide all issues raised in accordance with law after providing ample opportunity of hearing to the parties, preferably within period of three months after receipt of the copy of this judgment." (para 10). ## Why: a right, not a favour Gratuity is money for years of loyal service, and the Court said that "depending upon the terms and conditions of employment, it becomes a legal obligation rather than a voluntary benefit." (para 6). Once rules or the law structure it, "its payment turns into indispensable and mandatory rather than considering it mere bounty." (para 6). So a company in loss cannot use that as a reason to keep what is already owed: the plea of financial crunch "does not suffice to compromise, negate or deprive the accrued dues if payable in accordance with law" (para 6). ## Retired and still waiting? What to do Ask in writing. Keep your appointment letter, service record, pay slips, the retirement order and your employer's gratuity or provident fund rules, then send a legal notice asking for your full and final settlement: gratuity, provident fund and any other dues, with the date you retired. FAI Legal can draft a legal notice from a ready template; leave nothing out and keep a copy. Where you go next depends on who you worked for and your post: a worker in a factory, shop or company may have the Labour Court or the authority under the payment of wages law; an officer of a state company or a government servant may have a service tribunal or the High Court. Time limits can apply, so do not wait. Your case may be different: talk to a lawyer about your own papers. ## Find rulings like this on FAI Legal FAI Legal is a website: open failegal.site in your phone's browser, there is nothing to download. Ask your question in plain words, see this judgment in full on Judgment Search, and start a legal notice from a ready template. Don't go by what you hear: read the judgment yourself. ## The case at a glance - **Facts:** Officers and employees of a state company in Karachi, some recently retired, challenged in the Sindh High Court the withholding of financial benefits and amendments to the company's Gratuity Rules (para 2); the High Court dismissed their petitions on 16 January 2023, observing that the company was suffering financial loss (paras 1 and 5). The company relied on its financial crunch, closedown application, retrenchment and a Voluntary Separation Scheme (para 4). - **The question:** Whether a company's financial loss is a ground to refuse retired employees their gratuity and other benefits, and whether the High Court could decide the petitions on that ground without deciding the legal points raised (paras 3, 5 and 6). - **What the Court held:** Every employee is entitled to the full and final settlement on superannuation; non-payment of gratuity has nothing to do with losses or financial crunch; gratuity, provident fund and pension are a vested right; every employer must pay at retirement without pretext or deferment. The High Court's judgment was set aside and the matter remanded to decide all issues in accordance with law, preferably within three months (paras 5 and 10). - **Why:** The High Court decided on the company's financial crunch instead of the legal questions raised, including the vires of the amended Gratuity Rules, so its judgment was hit by the doctrine of sub silentio (paras 5, 6 and 8); where rules or the law structure gratuity, it is mandatory, not a bounty, and the financial crunch plea does not suffice to deprive accrued dues payable in accordance with law (para 6). - **Limits:** The Supreme Court did not decide the amounts or the validity of the amended Gratuity Rules: it sent every claim back to the High Court. Petitioners who accepted the Voluntary Separation Scheme will have their claims decided in accordance with law after the record is checked (para 6). What any employee is owed depends on the terms of employment and the law that covers the job. ## The law it relies on ## What this does not mean - It does not mean the retired officers in this case have been paid: the Supreme Court sent their claims back to the High Court to be decided in accordance with law, preferably within three months (para 10). - It does not make every employee entitled to gratuity: whether you are owed gratuity, and how much, depends on your terms of employment and the rules or law that cover your job (para 6). Who is entitled is on failegal.site/media/gratuity-private-employees-pakistan-workman-2021-scmr-1785. - It does not decide whether the company's amended Gratuity Rules were valid: the High Court has to decide that (paras 6 and 10). - The reel's accounts window, the garland and the friend are a picture of the question; the judgment speaks of officers and employees and their petitions, not of these scenes. ## Questions people ask ### Can a company hold back gratuity because it is in loss? No. On 2 September 2025 the Supreme Court of Pakistan said non-payment of gratuity has nothing to do with losses or financial crunch, and every employer must pay at retirement without pretext or deferment (C.P.L.As. Nos. 573-K to 575-K of 2023, para 5). ### When should gratuity be paid after retirement? At retirement. The Supreme Court said every employer is bound to pay off this liability immediately on the eve of retirement, not delay it for an indefinite period (para 5). ### What to do if the company is not paying gratuity? Keep your service papers and your employer's gratuity rules, and ask for your dues in writing, for example with a legal notice. The right forum depends on your job: the Labour Court or the payment of wages authority for workers, a service tribunal or the High Court for some public employees. Talk to a lawyer about time limits. ### Is gratuity a right or a favour? Where your terms of employment, rules or the law provide it, it is a legal obligation, not a bounty (para 6). Whether you are entitled at all depends on your job and rules: see failegal.site/media/gratuity-private-employees-pakistan-workman-2021-scmr-1785. ### Company nuqsan mein hai, kya gratuity ruk sakti hai? Nahin. Supreme Court ne 2 September 2025 ko kaha: gratuity na dene ka nuqsan se koi talluq nahin. Retirement par adaigi zaroori hai (para 5). ## Sources - A v. B (names withheld), C.P.L.As. Nos. 573-K to 575-K of 2023, Supreme Court of Pakistan, 2 September 2025. Non-payment of gratuity has nothing to do with losses or financial crunch; gratuity, provident fund and pension are a vested right of every retired employee; every employer must pay at retirement; the High Court's judgment set aside and remanded. ## What the reel says Company not paying your gratuity because it's "in loss"? That's not the law. Officers of a big state company in Karachi, some of them already retired, kept asking for their gratuity and allowances. The answer never changed: we're in loss. They went to the Sindh High Court in 2017, and in 2023 even the High Court agreed with the company. The company's losing money, so no benefits. Then the Supreme Court looked at it. Here's what it said on 2 September 2025: 1. Not paying gratuity has nothing to do with losses. 2. Gratuity, provident fund and pension are your right. Not a favour. 3. Every employer has to pay at retirement. No excuses, no "later". 4. The High Court's ruling? Set aside. The officers' claims go back to be decided on the law. How much you get still depends on your own rules and the law that covers your job. Retired and still waiting? Put it in writing, send a legal notice, and talk to a lawyer about your own case. Full story: failegal.site/media/company-not-paying-gratuity-losses-no-excuse-2025 Is that fair, even to a company in loss? Tell us in the comments, no names. --- Educational legal information, not legal advice. Every case turns on its own facts. Speak to a lawyer about your own case. Last checked: 11 November 2026. Review status: Pending advocate review. English: https://failegal.site/media/company-not-paying-gratuity-losses-no-excuse-2025 ยท Urdu: https://failegal.site/media/ur/company-not-paying-gratuity-losses-no-excuse-2025 FAI Media is part of FAI Legal (https://failegal.site), research on Pakistani statutes and judgments. Free to watch and read.