Payment of Gratuity Act, 1972

Group Members LEADER- AKANSHA PODDAR 065 Jugal Rathod 067 Darshil Shah 076 Hem Raval 068 Aditi Parkar 061 Snehal Tawde 081 Pinky Solanki 086 Divya Sharma 081 Priyanka Saraf 127 Kajal Solanki 085

Meaning of word “Gratuity”

The word ‘Gratuity’ has been derived from the word “Gratuitous” which means ‘Gift’ or ‘Present’.

It is a lump sum payment made by an employer as the retrial reward for his past service when his employment is terminated.

When is gratuity payable According to sec. 4(1) of this act, Gratuity

is paid to employees after rendering continuous service of 5 years:

- on his superannuation; - on his retirement or termination; - on his death or disablement due to

accident or disease.

If an employee is not in continuous service within the meaning of CLASS-1 he shall deemed to be in continuous service.

For a period of 1 year :

190 Days, if the employee was employed below the ground in a mine

190 Days ,if the employee was employed in an establishment which works for less than 6 days in a week 240 Days, in any other case

(Sec.2A)... Continuity

For a period of 6 months :

95 Days , if the employee was employed below the ground in a mine

95 Days , If the employee was employed in an establishment which works for less than 6 days in a week

120 Days , In any other case

(Sec.2A)… Continuity

Continuous Service” means uninterrupted service which may be interrupted on account of sickness , accident , leave , absence from duty without leave(not being treated as break in service),lay-off , strike , lock-out or cessation of work not due to the fault of the employee. Whether such uninterrupted or interrupted service was rendered before or after the commencement of the Act

Continuous Service (Sec.2A)

To whom gratuity is payable

normally to employees in case of death to his nominees

** in case of no nomination has made, or been made is minor , then controlling authority will deposit this money in the bank account for the benefits of minor nominee/ nominees.

Calculation of gratuity payable monthly salary x 15 days x no. of years of service

completedGratuity = 26

• Maximum salary payable under the gratuity act is Rs. 10,00,000/- sec.4(3).

* Mode of payment of gratuity: - in cash or - demand draft or - bank cheque - payment by postal money order if amount is less than Rs.

1000/- if employee desires.

Procedure to get gratuity

Submit Application in form I by employee or Application in form J by nominee (If employee is not alive) or Application in form K by legal heir (if employee is not alive).

Submit the application to the employer within 30 days from the date of it becomes payable. The employer shall pay the gratuity within 30 days from the receipt of the application. For belated payment the employer is liable to pay 10% simple interest also.

Forfeiture of gratuity(gratuity of employee who has terminated)

This act deal with issue in 2 parts: Section 4(6)(a): employee whose service have been

terminated for the act of willful omission or negligence causing any damages or loss or destruction of property belonging to employer, gratuity shall be forfeited extent of damages. In absence of proof of extent of damage, the right of forfeiture is not available.

Section 4(6)(b): employee have been terminated:a) For riotous or disorderly conduct or any act of violence.b) For act which constitute offence involving moral turpitude

provided that such offence committed by them in the course of his employment.

Every employee, who has completed 1 yr of service , is compulsorily required to make a nomination (Form F)

The nomination must be made within 30 days

The nomination must be made in favor of one or more members of the family(nomination shall be void if it is made in favor of a person who is not a member of his family)

If at the time of making nomination, the employee does not have family, the nomination may be made in favor of any person

The employee may distribute the amount of gratuity amongst more than one nominee

Nomination (Sec.6)…

PENALITIES

OFFENCE PENALTY

False statement to avoid payment

6 months imprisonment or Rs 10,000 or both

Default in complying with Act

3 months-1 yr imprisonment or Rs 20,000 or both

Non-payment of Gratuity

6 months-2 yrs imprisonment

Recovery of Gratuity (Sec. 8)

If the employer fails to pay the gratuity within the prescribed time (i.e., within 30 days of termination of employment), the controlling authority is empowered to issue a certificate to the Collector to recover the amount of Gratuity.

The employer shall also be liable to pay Compound Interest at such rate as may be notified by CG from time to time.

The interest shall be paid from the date of expiry of the prescribed period & ending with actual date of payment of Gratuity.

The interest payable shall not exceed the amount of Gratuity payable.

Duties and obligation of the employer

Employer duty to determine and pay gratuity:

• Section 7(2): lays down as soon as gratuity become payable the employer shall, whether an application has been made or not, determine the amount of gratuity and give notice in writing to the person to whom gratuity is payable.

• Section 7(3): employer shall pay the gratuity within 30 days from the date it become payable.

• Section 7(3A): under sub section, if gratuity is not paid within specified period then gratuity becomes payable along with simple interest at the rate of 10% p.a.

• Section 7(4(e): if the disputes relates to the amount of gratuity payable , the employer shall deposit the amount with controlling authority such amount as he admits to be payable by him.

Rights and obligation of employee Application for payment of gratuity:

• Section 7(1): person eligible to gratuity, to act on his behalf shall send a written application on this behalf.

• Rule 7: the payment of gratuity rules, 1972 provides that the application shall be ordinarily made within 30days from the date of gratuity becomes payable.

• In case of superannuation or retirement of employee is known, the employee may apply before 30 days of superannuation or retirement.

• Rule 7(2): A nominee of employee is eligible for gratuity in case death of employee shall apply within 30 days from the date it becomes payable to him.