The Payment of Gratuity Act, 1972

Transcription

1 The Payment of Gratuity Act, 1972 Applicability of the Act: The Act applies to every Factory, Mine, Oilfield, Plantation, Port, Railway Company. The Act applies to every shop or establishment in which 10 or more persons are employed on any day in the preceding 12 months. Once the act becomes applicable, it shall continue to be applicable to the establishment, even if the number of persons employed falls below the number specified in the act. The Act applies to employees working in the temple [Shree Jagannath Temple Vs Jagannadh Padhi] Family: The employee himself/herself, Spouse of employee, children of employee (whether married or unmarried) Dependent parents of employee and his/her spouse Window and children of predeceased son of employee. Adopted son Continuous Service: When employee can be treated as in continuous period of one year: If the employee during the period of twelve calendar months preceding the date on which calculation is being made, has actually worked under the employer for not less than- i. 190 days, in the case of any employee employed below the ground in a mine or in an establishment which works for less than six days in a week. ii. 240 days, in any other case. 1 P a g e

2 When employee can be treated as in continuous period of Six Months: if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than- i. 95 days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; ii. 120 days in any other case Where an employee, employed in a seasonal establishment, is not in continuous service within the meaning mentioned above, for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than 75% of the number of days on which the establishment was in operation during such period. For computing the days on which an employee has actually worked under an employer shall include the days on which- a) He has been laid-off b) The days during which he has been on leave with full wages. c) In the case of a female, she has been on maternity leave. However the total period of such maternity leave does not exceed 12 weeks. d) He has been absent due to temporary disablement caused by accident arising out of and in the course of his employment 2 P a g e

3 Eligibility for Gratuity: Continuous service of 5 years: On termination of employment, an employee shall be eligible to receive gratuity, If he has rendered continuous service for not less than 5 years On his superannuation; or On his retirement or resignation; or No requirement of 5 years continuous service: Completion of continuous service of 5 years is not necessary if the employment of an employee is terminated due to death or disablement due to accident or disease. Amount of Gratuity: In case of monthly rated employee: Gratuity shall be 15 days wages for every completed year of service or part thereof in excess of six months. wages means last drawn wages. Month means a period of 26 days. Gratuity = Last drawn wages X 15/26 X completed/part years of service In case of piece rated employee: Gratuity = Last Drawn Wages X 15/26 X completed years of service Last drawn wages shall be computed by taking the average of total wages received by him for a period of 3 months immediately preceding the termination of his employment. Overtime wages shall not be included for the calculation. 3 P a g e

4 In case of seasonal establishment: Such an employee shall be paid gratuity at the rate of 7 days wages for each season. Gratuity in case of disabled employee: If an employee becomes disabled due to accident or disease so that he becomes incapable of performing the work which he was performing before such accident or disease, but is re-employed on reduced wages on some other job, he shall be paid gratuity as follows- a) For the period preceding the disablement: on the basis of wages last drawn by the employee at the time of disablement. b) For the period subsequent to the disablement: on the basis of the reduced wages last drawn by the employee at the time of termination of service. Reduction or Forfeiture of Gratuity: Forfeiture to the extent of loss: If the services of an employee are terminated for any act, willful omission or negligence resulting in damage or loss or destruction of the property of the employer. The gratuity payable to the employee shall be forfeited to the extent of such damage or loss. Forfeiture of whole or part of gratuity: The services of an employee are terminated for his riotous or disorderly conduct or any other act of violence on his part, or for any act which constitutes an offence involving moral turpitude, provided such offence is committed by him in the course of his employment. Employee is staying in employer s quarters or is in occupation of any of his land and refused to surrender after completing his employment. This is not a valid ground to forfeit or withhold gratuity [Wazir Chand Vs Union of India]. 4 P a g e

5 Determination and Payment of Gratuity: Application: Employee, nominee, legal representative or legal heir can make an application. Gratuity shall be payable within 30 days from the date it becomes payable. In case of any dispute, employer shall deposit the payable amount with Controlling Authority. Controlling Authority shall enquire and determine the gratuity payable. Any aggrieved person shall file a appeal with Court in 60 days from date of order. Recovery of Gratuity: If the employer fails to pay the gratuity within the prescribe time, the controlling authority shall issue a Recovery Certificate to the collector to recover the amount of gratuity. Before issuing the certificate, employer shall be given an opportunity of being heard. The employer shall also be liable to pay compound interest at such rate as may be specified. Interest shall be paid from the day the gratuity becomes payable to the date of actual payment. However, interest payable shall not exceed the gratuity payable. The gratuity shall be recovered by the collector in the same manner as if it were arrears of land revenue. Nomination: Every employee who has completed 1 year of service, is compulsorily required to make a nomination. The nomination must be made within 30 days of completion of one year of service. If an employee has a family at the time of making a nomination, the nomination shall be made in favour of one or more members of his family, and any nomination made by such employee in favour of a person who is not a member of his family shall be void. 5 P a g e

6 If at the time of making a nomination the employee has no family, the nomination may be made in favour of any person or person but if the employee subsequently acquires a family, such nomination shall forthwith become invalid and the employee shall make within such time as may be prescribed, a fresh nomination in favour of one or more members of his family. Compulsory Insurance: Every employer shall get his establishment registered with the controlling authority. No employer shall be allowed to register unless she has taken insurance or established an approved gratuity fund. The Insurance shall be taken against his liability for payment of gratuity. The insurance shall be taken with LIC. 6 P a g e