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The Payment of GratuityAct, 1972

At a Glance

By,Sheetal Londhe

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Applicability

Every factory, mine, oil plantation,port and railway company

Every shop or establishment if itemploys 10 or more persons inthe preceding 1 year.

To any other establishment employing 10 or more persons.

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Payment of Gratuity

Gratuity is payable if there is :-

Continuous service of 5yrs(not necessary

incase of death or disablement) On termination due to superannuation or

retirement

Resignation, death or disablement due to

accident or disease In case of death, the amount will be paid to

nominee or legal heir

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Calculation of Gratuity: For Everycompleted Year of Service in excess of Six Months

Monthly rate of wage lastdrawn X 15

26

Mode of payment of Gratuity

In cash or DD or bank chequePayment bypostal moneyorder if amount

is less than Rs.1000 if employee desires

Maximum amount payable is Rs.3,50,000

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Determination, application and

notice for payment of gratuity

Person eligible has to make a writtenapplication to employer within 30 days when

it fell due.

Incase of death, the legal heirmustmake application within 1 yrfrom whengratuity became applicable.

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As soon as gratuity becomes payable, employermust determine the gratuity even beforeapplication is made and must send notice toperson to whom it is payable.

Within 15 days of receipt of application, employershall, If claim is admissible, send notice within 30

days If claim is inadmissible, send notice on form

M

To be paid within 30 days from the date itbecomes payable

If not paidwithin 30 days, simple interestfrom the payable date to paid date.

No interest if delay is due to employees fault.

Determination, application and

notice for payment of gratuity

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Gratuity Disputes

In case of any dispute wrt gratuity, theamount must be deposited with controllingauthorityand application must be made toauthority for direction within 90 days of

occurrence. Controlling Authority shall make due inquiriesand if claim is found admissible, direct

payment is made to person entitled. Such issue of direct payment must be madeto employer within 30 days from date ofreceipt of the same by employer.

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Appeal

The appeal is made by the personaggrievedby order to Controlling

Authority.

Limitation 60 days from the date ofreceipt of order which is furtherextended to 60 days more on sufficient

cause.

Gratuity Disputes

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Nominations To be made after completion of 1 years service. Form F

An employee may in his nomination, distribute the

amount of gratuity payable to him, under this Actamongst more than one nominee.

If an employee has a familyat the time of nomination,the nomination shall be made in favor of one or moremembers of his family, and any nomination made bysuch employee in favor of a person who is not amember of his family, shall be void.

If at the time of making a nomination the employeehas no family, the nomination may be made in favor ofany person but if the employee subsequentlyacquires a family (Form G), such nomination shallbecome invalid.

A nomination may, be modified by an employee at anytime, after giving to his employer a written notice insuch form and in such manner as may be prescribed,of his intention to do so. Form H

Every nomination, fresh nomination or alteration ofnomination, as the case may be, shall be sent by theemployee to his employer, who shall keep the same inhis safe custody.

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Family", in relation to an employee, shall bedeemed to consist of in the case of a male employee, himself, his wife, his children,whether married or unmarried, hisdependent parents the dependent parents of his wife and the widow and children of his predeceasedson, if any

Family

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Family

in the case of a female employee,herself, her husband, her children,whether married or unmarried, her dependent

parents andthe dependent parents of her husband andthe widow and children of her predeceasedson, if any

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Can adopted children become

family members? Where the personal law of an employee permits the

adoption by him of a child,

any child lawfully adopted by him shall be deemed to be

included in his family,

and where a child of an employee has been adopted byanother person and such adoption is, under the personallaw of the person making such adoption, lawful, such

child shall be deemed to be excluded from the family ofthe employee

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Penalties

False statements toavoid payment

Default in complying

with Act

Non-payment ofGratuity

6mts imprisonmentor Rs.10,000 or both

3mts 1yrimprisonment or

Rs.20,000 or both

6mts 2yrimprisonment

OFFENCE PENALTY

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~ The End ~