THE PAYMENT OF GRATUITY ACT 1972Gratuity is a kind of retirement benefit It is to help an employee after his retirementThe general principle underlying gratuity schemes is that by faithful service over a long period the employee is entitled to claim a certain amount as retirement benefit

Cont..

The Gratuity is thus earned by the employee as a reward for long service

Employee becomes entitled to gratuity on his retirement or termination or on leaving the service after completion of 5 yrs service

PAYMENT OF GRATUITY SEC 4Gratuity shall be paid to an employee on termination after he has worked continuously for not less than 5 yrsOn his superannuation (retirement after certain age limit)On his resignationOn his death

RATE OF GRATUITY SEC 4(2)

It is mandatory (compulsory) to pay gratuity to those employees who have worked for not less than 5 yrs with the employerThe employee is entitled to receive gratuity at the rate of 15 days salary per completed year of the service

The computation of gratuity will be on a the last salary drawn of the employee Incase of monthly rated employees, the rate of ones wages is to be computed by dividing the monthly wages by 26 days

The maximum limit of gratuity is Rs. 3,50,000/-

FORFEITURE OF GRATUITY SEC 4(6)

The gratuity of an employee whose services have been terminated for any act or negligence causing any damage or loss or destruction of property belonging to the employer shall be forfeited to the extent of the damage or loss caused

Cont

The gratuity payable to an employee may be wholly or partially forfeited if the services of such employee have been terminated for

His disorderly conduct or any other act of violence on his part

Cont.

2.Any act which constitutes an offence involving moral behaviour, if such offence is committed by him in the course of his employment

PROTECTION OF GRATUITY SEC 13Incase of death of the employee, the amount due to him an account of his gratuity has to be paid to his legal representative. It means the gratuity becomes attachable in the hands of the legal representativeThe gratuity payable under this act cannot be attached by any other reason

COMPULSIONS FOR EMPLOYERIf the employee has completed 5 yrs of the service with the employer, it is mandatory for the employer I) To determine the amount of gratuity as soon as it becomes payableII) To inform to the employee in writingIII) To inform to the Controlling Authority in writing

Cont..IV) To pay gratuity within 30 days

2. If the employer fails & neglects to pay the gratuity, the employee has to give notice

3. Incase if the employer does not accept the claim of gratuity raised by the employee, then the reason as to why claim is not accepted has to be given

Cont.

4. If the employer does not take any action within 90 days, the employee has to apply to the Controlling Authority

5. The Controlling Authority after hearing to both the parties will pass the appropriate order on the application for gratuity

Cont

6. The employer has to pay the amount of gratuity in cash if so desired by the employee or Demand Draft or by Bank Cheques7. If the gratuity is not paid by the employer within 30 days from the date it becomes payable, the employer has to pay interest at 10 % p.a.