The Payment of Gratuity Act, 1972 MT

7/28/2019 The Payment of Gratuity Act, 1972 MT

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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

The Payment of Gratuity Act, 1972 MT

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