Post on 03-Apr-2018
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The Payment of
Gratuity Act, 1972
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Applicability:
Every factory, mine, oil-field, plantation, portand railway co; every shop and
establishments in which 10 or > employedif the number becomes < 10 later still theestt will continue to be covered.
Definitions:
Continuous Service: As in the ID Act, 1947
Employee : everyone employed in the estt.
Mentioned aboveWages : emoluments while on duty or onleave + DA, but not bonus, o.t., h.r.a,commission& other allowances
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Payment of Gratuity:
G shall be payable on the termination ofemployment after he has rendered continuous
service for not < 5 years.For death or disablement this stipulation of 5 years
service is waived
G Amount = Last drawn wages x No. of
years of service rendered x 15divided by 26
For piece rated employee daily wage to becomputed on the average of 3 months wage
For seasonal gratuity @ 7 days wages for eachseason
The amount shall not exceed Rs. 3.5 lakhs(Revised upwards w.e.f. 2010 to 10 lakhs)
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Forfeiture:
If service is terminated for any act, wilful
omission or negligence causing any
damage or loss to, or destruction of,
property of employerG forfeited to the
extent of damage.
G may be wholly or partially forfeited if:
(i) terminated for riotous or disorderly
behaviour or any other act of violence
(ii) terminated for offence involving moralturpitudeprovided such offence
committed by him in the course of
employment.
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Compulsory Insurance:
It is a precondition for registering with
controlling Authority. Must obtain an
insurance for his liability for payment of
gratuity from LIC or any other prescribed
insurer.
OR
If already an approved gratuity fund exists in
an estt or has 500 or > employees it can be
exempted from this insurance requirement
provided an approved gratuity fund is
established therein.
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Power to Exempt (sec 5)
Nomination: (sec 6)
Determination of the amount of gratuitySec 7 : Employee should apply in writing
for it in prescribed form;
Whether applied or not, as soon as itbecomes payable, employer must
determine the amount due and give notice
to the employee and to the controlling
authority;
within 30 days it becomes payable, to be
paid - otherwise with interest (if the delay
is not due to the fault of employee)
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If there is any dispute
Employer should deposit the amount he
admits to be paid with the controlling
authority and the employer, employee or
any other person raising dispute may make
an application to the CA
After hearing the parties the CA will direct
the amount, either increased or reduced,
from the deposited amt.
Within 60 days from the date of receipt of
CAs order appeal may be preferred to the
appropriate Govt or to such other authority
as may be prescribed