Payment Of Gratuity Act, 1972

by:

Nishtha Sharma

Puja Mittal

Ritika Khanna

Shivangi Verma

Sonal Agarwal

GratuityA kind of retirement benefit.It is a payment that is intended to help

an employee after his retirement.General principle - for faithful service

over a long period the employee is entitled to claim a certain amount as retirement benefit.

Earned by an employee for long & meritorious service.

Enactment of Payment of Gratuity

Act {1972}Proposal for enactment was discussed in:

• Labour Minister’s Conference {Aug 24 & 25}

• Indian Labour Conference {Oct 22 & 23}

A bill was passed as the Payment Of Gratuity Act 1972.

Definitions “Appropriate Govt.”

• In relation to an establishment: a) Belonging to, or under the control of Central

Government.b) Having branches in more than one state.c) Of a major port, mine, oilfield or railway company,

the Central Govt.• In any other case, the State Government.

“Controlling Authority”-an authority appointed by the appropriate govt.

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.

Payment of Payment of GratuityGratuity

It is a payment that is intended to help an employee after his retirement whether the retirement is due to super-annuation or due to some physical disability.

Formula Of Gratuity =(Last Month Wages *15*No. of Services)/26

1. Gratuity should be paid to an employee on the termination of his employment after he has rendered service for not less than 5 yrs -

on his super-annuation his retirement his resignation on his death or disablement due to

disease or accident

Payment of GratuityPayment of Gratuity

Condition:- Completion of continuous services of five years

is not necessary when the termination of employee is due to death 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.

Payment of GratuityPayment of Gratuity

Payment of GratuityPayment of Gratuity3. The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.4. Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

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

making a nomination, the nomination shall be made in favor 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

4. If the employee acquires a family after making a nomination 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

Determination of the Amount of Gratuity

(Sec.7) •Application for gratuity[sec7(1)]:An employee who is eligible for payment of gratuity can give an application in writing to the employer within 30 days from the date the gratuity becomes payable. .

Determination of the Amount of Gratuity

(Sec.7) Determination of gratuity [Sec7(2)]: Employer determine the amount of the

gratuity and give notice to controlling authority and the employee.

Payment of gratuity[sec7(3)]: Employer pay the amount of gratuity to

the employee.

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 notified by 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.

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 public servant within the meaning of section 21, of the Indian Penal Code, 1860.

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 other document in respect of offence;

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 of gratuity.

(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

Penalties2) An employer who contravenes, or makes default in complying with, any of the provisions of this Act or any 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

Exemption of employer from liability

In certain cases Where an employer is charged with an offence

punishable under this Act, he shall be entitled, upon complaint duly made by him and on giving to the complainant not less than three clear days notice in writing of his intention to do so, to have any other person whom he charges as the actual offender brought before the court at the time appointed for hearing the charge; and if, after the commission of the offence has been proved, the employer proves to the satisfaction of the court

Protection Of Gratuity

No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, 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.

Power to make rules.

The appropriate Government may, by notification make rules for the purpose of carrying out the provisions of this Act.

Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session.

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