Gratuity Act (Vikram)

8/9/2019 Gratuity Act (Vikram)

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Payment Of Gratuity Act, 1972


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GratuityA kind of retirement benefit.

It is a payment that is intended to help an employeeafter his retirement.

General principle - for faithful service over a longperiod the employee is entitled to claim a certain

amount as retirement benefit.Earned by an employee for long & meritorious

service.


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Definitions: section-2

S.2 (e) "employee" means any person employed to do any

skilled, semi-skilled, or unskilled, manual, supervisory,

technical or clerical work

it does not include an apprentice

S.2 (s) "wages" includes dearness allowance but does not

include any bonus, commission, house rent allowance,overtime wages and any other allowance.


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Enactment ofPayment of Gratuity Act {1972

}Proposal for enactment was discussed in:

Labour Ministers Conference {Aug 24 & 25} Indian Labour Conference {Oct 22 & 23}

A bill was passed as the Payment Of Gratuity Act1972.


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Scope And Coverage The Act applies to the whole of India.

The Act applies to:

Every mine , factory, oilfield, plantation, port &

railway company.

Every shop or establishment in which 10 or more

persons are employed.

The Act does not apply to:

Persons who hold civil Posts under the Central

Government or State Government.


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Payment of GratuityPayment of Gratuity

It is a payment that is intended to help an

employee after his retirement whether the retirementis due to super-annuation or due to some physical

disability.


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How to calculate the Amount of Gratuity

Monthly rated employee :

At the rate of 15 days wages based on the rate of wages last drawn by theemployee concerned:

Formula: last drawn wages * 15 days * No. of completed year of service

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piece-rated employee, daily wages :

On the average of the total wages received by him for a period of three monthsimmediately preceding the termination of his employment excluding overtimewages

seasonal establishment

At the rate of seven days wages for each season.

Maximum Limit Rs.3,50,000/-

Higher benefits can be paid if the employer so desires.


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1. Gratuity should be paid to an employee on the

termination of his employment after he has renderedservice for not less than 5 yrs -

on his super-annuation

his retirement

his resignation

on his death or disablement due to disease or accident



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Condition:-

Completion of continuous services of five years is notnecessary when the termination of employee is due todeath of disablement.

In case of death of employee gratuity payable to him is

paid to his nominee.2. For every completed year of service or part, the employer

shall pay gratuity to the employee at the rate of fifteen

days wages based on the rate of the wags last drawn by

the employee concerned.



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3. The amount of gratuity payable to an employee

shall not exceed three lakhs and fifty thousandrupees.

4. Nothing in this section shall affect the right of

an employee to receive better terms of gratuityunder any award or agreement or contract with

the employer.


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NominationNomination1. If an employee has a family at the time of making

a nomination, the nomination shall be made infavor of one or more member of his family .

2. If any nomination is made by an employee in favor

of a person who is not the member of his family,

shall be void.

3. If an employee has no family at the time of

making a nomination, the nomination shall be

made in favor of any person or persons


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4. If the employee acquires a family after making anomination then such nomination become invalid,

and a fresh nomination is made in favor of a family

member.

5. Every nomination , fresh nomination or

alternation of nomination shall be sent by the

employee to his employer, who shall keep it in his

safe custody.

NominationNomination


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Determination of the Amount ofGratuity (Sec.7)

Application for gratuity[sec7(1)]:

An employee who is eligible for payment of gratuity can give an application in writing tothe employer within 30 days from the date thegratuity becomes payable.

.


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Determination of the Amount of

Gratuity (Sec.7)

Determination of gratuity [Sec7(2)]:

Employer determine the amount of the gratuityand give notice to controlling authority and theemployee.

Payment of gratuity[sec7(3)]:

Employer pay the amount of gratuity to the employee.


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Determination of the Amount of

Gratuity (Sec.7)

Payment of interest[sec7(3A)]:

Interest is paid if the amount of gratuity is not paid within a period of 30 days at the rate notifiedby central government.

Dispute as to Gratuity[sec7(4)]:

If disputes arises regarding the amount of the gratuity and the claim taken by nominee the employer deposit the amount to the controlling

authority, and he solve the dispute.


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Inspectors(Sec.7A)

Appointed by the Government for the purpose of

this act. Two or more inspector can be appoint for the same

area.

Every Inspector shall be deemed to be a publicservant within the meaning of section 21, of the

Indian Penal Code, 1860.


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Powers of the Inspectors(Sec 7B)

Ask for any information from the employer. Examining any register, record or notice or other

documents.

Search and seize register, record, notice or otherdocument in respect of offence;


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Recovery of Gratuity(Sec 8)

Controlling authority issued certificate to the

collector on behalf of aggrieved party. Collector recover the amount together with

compound interest.

Amount of interest should not exceed the amount ofgratuity.


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(1) Whoever, for the purpose of avoiding any payment to be

made by himself under this Act or of enabling any other

person to avoid such payment, knowingly makes or causes to

be made any false statement or false representation shall be

punishable with imprisonment for a term which may extend

to six months, or with fine which may extend to ten thousand

rupees or with both.

Penalties


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Penalties2)An employer who contravenes, or makes default in

complying with, any of the provisions of this Act orany rule or order made there under shall be punishable

with imprisonment for a term which shall not be less

than three months but which may extend to one year,or with fine which shall not be less than ten thousand

rupees but which may extend to twenty thousand

rupees, or with both


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Can Gratuity be withheld by the employer ?

The gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing anydamage or loss to, or destruction of, property belonging to the

employer, shall be forfeited to the extent of the damage or loss socaused.The gratuity payable to an employee may be wholly or partially

forfeited If the services of such employee have been terminated for his

riotous or disorderly conduct or any other act of violence on hispart, orIf the services of such employee have been terminated for any actwhich constitutes an offence involving moral turpitude, providedthat such offence is committed by him in the course of his employment.


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Protection Of Gratuity No gratuity payable under this Act and no gratuity

payable to an employee employed in anyestablishment, factory, mine, oilfield, plantation,

port, railway company or shop exempted under

section shall be liable to attach-ment in execution of

any decree or order of any civil, revenue or criminal

court.


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Documents

Gratuity Act (Vikram)