The Payment of Gratuity Act, 1972

Transcription

1 The Payment of Act, 1972 Particulars Section/ Rule Provisions Punishment Objective To provide a retirement benefit to the wkmen who have rendered long and unblemished service to the employer and have contributed to the ganisation's well-being. Scope & Coverage Sec 1 The Act applies to Every: Facty, Mine, Oil field, Plantation, pt, Railways, Company, Shop, Establishment Educational institutions Employing 10 me employees Non -Seasonal 15 days wages f every completed year of service. Seasonal 7 days wages f every completed year of service. Calculation of Sec 1 Wage to be considered F Monthly rated Employees 15 days wages = Monthly wages last drawn*15/26 F Piece rated Employees 15 days wages = Wages (excl. Overtime wages f the period of 3 months immediately preceding the termination of his employment)*15/no. of wking days in such period of 3 months.

2 Meaning of Wages Entitlement of employee Continuous service Sec 2 Sec 4 Sec 2A All emoluments which are earned by an employee while on duty on leave in accdance with the terms and conditions of his employment and which are paid are payable to him in cash Includes dearness allowance Does not include any bonus, commission, house rent allowance, overtime wages and any other allowance. All employees irrespective of status salary On rendering of 5 years of Continuous service, Either termination, resignation retirement Except in case of death disablement Uninterrupted service which may be interrupted on account of Sickness, Accident, Leave, Absence from duty (not being treated as break in service), Lay-off, Strike, Lock-out Cessation of wk not due to the fault of the employee

3 Calculation of Continuous Service Maximum amount of Ffeiture of Sec 2A Sec 4(6) * After considering the above days as wked/present an employee is deemed to be in continuous service if the following criteria are met F Seasonal Establishments > If he has actually wked f at least 75% of the days on which the establishment was in operation. F Non-Seasonal Establishment Establishment wking f less than 6 days a week Mine > if he has wked f 190 days during the preceeding 12 months 95 days during the preceding 6 months. Other Establishments > if he has actually wked f 240 days during the preceeding 12 months 120 days during the preceding 6 months. The maximum amount of gratuity that can be paid is Rs. 10,00,000. Partial Ffeiture The gratuity of an employee, whose services have been terminated f any act, willful omission negligence causing any damage loss to, destruction of, property belonging to the employer, shall be ffeited to the extent of the damage loss so caused; The gratuity payable to an employee shall be wholly ffeited,- (i) if the services of such employee have been terminated f his riotous disderly conduct any other act of violence on his part, (ii) if the services of such employee have been terminated f any act which constitutes an offence involving mal turpitude, provided that such offence is committed by him in the course of his employment.

4 Nomination f Sec 6 Each employee who has completed one year of service is required to make a nomination f the purposes of gratuity in case of his death. There can be me than one nominee. (Fm F). A nomination may be modified by an employee at any time, after giving to his employer a written notice of his intention to do so. Determination and payment of the amount of Compulsy Insurance Establish Approved Fund Sec 7 Sec 4A An employee who is eligible f gratuity shall send a written application to the employer, within 30 days from the date of gratuity becoming payable. After receiving such Application, the employer shall determine the amount of gratuity and give notice in writing to the employee specifying the amount payable and the date of payment Such date of payment shall be within 30 days from the receipt of application. Every employer has to obtain an insurance f his liability to pay from the LIC. However, an employer who has already established an approved fund may claim exemption from such compulsy Insurance. F delay in payment Simple 10% p.a F non-payment Sec 9 (2) Fine of Rs.10,000 to Rs.20,000 Imprisonment up to 2 years Both

5 Offences and Penalties Sec 9 Making causing to be made any false statement false representation - Imprisonment upto 6 months Fine upto Rs Both Contravention non-compliance with any provision - Imprisonment of 3 months to 1 year Fine of Rs.10,000 to Rs.20,000 Both. Disclaimer: The articles contained in LnCo website, are contributed by the respective resource persons and any opinion mentioned therein is his/their personal opinion. LnCo updates is intended to be circulated among fellow professional and clients of the Firm, to provide general infmation on a particular subject subjects and is not an exhaustive treatment of such subject(s). The infmation provided is not f solicitation of any kind of wk and the Firm does not intend to advertise its services solicit wk through Lnco Website. The infmation is not intended to be relied upon as the sole basis f any decision. Befe making any decision taking any action that might affect your personal finances business, you should consult a qualified professional adviser. Laxminiwas & Company (Firm) does not endse any of the content/opinion contained in any of the articles in LnCo website, and shall not be responsible f any loss whatsoever sustained by any person who relies on the same.