Presented by:
Anish Gupta
What is Gratuity? Token of appreciation for the service given A kind of retirement benefit 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 Gratuity is a lump sum amount that the employer
When Gratuity is paid? At the time of Superannuation Retirement Resignation Death Disability (accident or illness)*
after the employee has rendered service for at least 5 yrs
Enactment of Payment of Gratuity Act {1972}
Proposal for enactment was discussed in:
Labor Minister’s Conference {Aug 24 & 25} Indian Labor Conference {Oct 22 & 23} A bill was passed as the Payment Of Gratuity Act
1972.
Authorities of Payment of Gratuity Act {1972}
Appropriate Government Controlling Authority Inspectors
Scope & 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: State of Jammu and Kashmir
Payment of Gratuity CASE-1 Employees are covered Under the Payment of
Gratuity Act, 1972: Gratuity shall be calculated as per the below formula: Gratuity =( Last drawn salary x 15/26 x No. of years of service) Last drawn salary = basic pay + D.A (dearness allowance)
Payment of Gratuity CASE-2 Employees are not covered Under the
Payment of Gratuity Act, 1972: Gratuity shall be calculated as per the below formula: Gratuity =( Last drawn salary x 1/2 x No. of years of service) Last drawn salary = basic pay + D.A (dearness allowance)
Maximum amount payable Before the 6th Pay Commission
Rs. 3.50lacs After the 6th Pay Commission
Rs. 10.00lacs Total Gratuity amount that a employee receive will not exceed the above amount
Determination of the amount Sec.(7) Application for gratuity[sec7(1)]:
An eligible employee can give an application in writing to the employer within 30 days from the date the gratuity becomes payable. 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 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
Forfeiture If an employee is terminated due to
Willful omission or negligence causing damage to employer’s property for riotous or disorderly conduct or any act of violence moral turpitude
Protection No gratuity payable under the Act shall be
liable to attachment in execution of any decree or order of any civil, revenue or criminal court. If the employee had agreed to a deduction from the amount due as gratuity then that amount can be recovered
Penalties Details of Violation
Penalty
For avoiding any payment knowingly makes any false statement or representation
Shall be punishable with imprisonment upto 6 months or fine upto Rs. 10,000.00 or both.
Failure to comply with any provision of the Act or Rules
Shall be punishable with imprisonment upto 1 year but will not be less than 3 months or with fine, which will not be less than Rs. 10,000.00 but may extend upto Rs. 20,000.00 or with both.
Any offence relating to non payment of gratuity under the Act
Employer shall be punishable with imprisonment for a term which shall not be less than 6 months