|



 

Prof. Priyanka Nagori

r 

° | is act envisages to provide a retirement

benefit to t e workmen w o ave rendered
long and unblemis ed service to t e
employer, and ave t us contributed to t e
prosperity of employer. Gratuity is a reward
for long and meritorious service .It is a
compulsory ,statutory retirement benefit.
 


° | e general principle be ind t is is t at by fait ful service over a long period of
time employee is entitled to claim a certain amount as retirement benefit.
° It is a measure of Social Security.
 
 G
|o w ole of India except J&k
° It s all apply to- -
° (a) every factory, mine, oilfield, plantation, port and railway company;
° (b) every s op or establis ment wit in t e meaning of any law for t e time
being in force in relation to s ops and establis ments in a State, in w ic ten or
more persons are employed, or were employed, on any day of t e preceding
twelve mont s;
° (c) suc ot er establis ments or class of establis ments, in w ic ten or more
employees are employed, or were employed, or, any day of t e preceding
twelve mont s, as t e Central Government may, by notification, specify in t is
be alf.
SectionG 5
Power to exempt

(1) | e appropriate Government may, by notification, and subject

to suc conditions as may be specified in t e notification,
exempt any establis ment, factory, mine, oilfield, plantation,
port, railway company or s op to w ic t is Act applies from t e
operation of t e provisions of t is Act if, in t e opinion of t e
appropriate Government, t e employees in suc
establis -ment, factory, mine, oilfield, plantation, port, railway
company or s op are in receipt of gratuity or pensionary
benefits not less favorable t an t e benefits conferred under
t is Act.






 


 ! means ±eit er t e Central or State

Government .
Central Government G
In relation to an establis ment-
° (a) belonging to, or under t e control of, t e Central Government,
° (b) aving branc es in more t an one State,
° (c) of a factory belonging to, or under t e control of, t e Central
Government,
° (d) of a major port, mine, oilfield or railway company, t e Central
Government,
° (ii) in any ot er case, t e State Government;






" means continuous service for one year
° r#  

$
"%
#  





 &





' 







( 
1) an employee s all be said to be in continuous service for a
period if e as, for t at period, been in uninterrupted service,
including service w ic may be interrupted on account of
sickness, accident, leave, absence from duty wit out leave (not
being absence in respect of w ic an order treating t e
absence as break in service as been passed in accordance
wit t e standing order, rules or regulations governing t e
employees of t e establis ment), lay off, strike or a lock-out or
cessation of work not due to any fault of t e employee, w et er
suc uninterrupted or interrupted service was rendered before
or after t e commencement of t is Act.
° (2) w ere an employee (not being an employee employed in a


 
) is not in continuous service wit in
t e meaning of clause (1), for any period of one year or six
mont s, e s all be deemed to be in continuous service under
t e employer -
° (a) for t e said period of 

, if t e employee during t e
period of twelve calendar mont s preceding t e date wit
reference to w ic calculation is to be made, as actually
worked under t e employer for not less t an -
° (i) one undred and ninety days, in t e case of an employee
employed below t e ground in a mine or in an establis ment
w ic works for less t an six days in a week; and
° (ii) two undred and forty days, in any ot er case;
° (b) for t e said period of   , if t e employee during t e
period of six calendar mont s preceding t e date wit reference
to w ic t e calculation is to be made, as actually worked
under t e employer for not less t an -
° (i) ninety-five days, in t e case of an employee employed below
t e ground in a mine or in an establis ment w ic works for
less t an six days in a week; and
° (ii) one undred and twenty days, in any ot er case;
° 
G For t e purpose of clause (2), t e number of days on
w ic an employee as actually worked under an employer s all
include t e days on w ic -
° (i) e as been laid-off under an agreement or as permitted by
standing orders made under t e Industrial Employment (Standing
Orders) Act, 1946 (20 of 1946), or under t e Industrial Disputes
Act, 1947 (14 of 1947), or under any ot er law applicable to t e
establis ment;
° (ii) e as been on leave wit full wages, earned in t e previous
year;
° (iii) e as been absent due to temporary disablement caused by
accident arising out of and in t e course of is employment and
° (iv) in t e case of a female, s e as been on maternity leave;
so, owever, t at t e total period of suc maternity leave does
not exceed twelve weeks.
° (3) w ere an employee employed in a seasonal establis ment,
is not in continuous service wit in t e meaning of clause (1), for
any period of one year or six mont s, e s all be deemed to be
in continuous service under t e employer for suc period if e
as actually worked for not less t an seventy-five per cent of
t e number of days on w ic t e establis ment was in
operation during suc period.
°  $
 % in relation to an employee, s all be deemed
to consist of -
° (i) in t e case of a male employee, imself, is wife, is
c ildren, w et er married or unmarried, is dependent parents
and t e dependent parents of is wife and t e widow and
c ildren of is predeceased son, if any,
° (ii) in t e case of a female employee, erself, er usband, er
c ildren, w et er married or unmarried, er dependent parents
and t e dependent parents of er usband and t e widow and
c ildren of er predeceased son, if anyG
° *


 (Sec. 2 q) means termination of t e service of an
employee ot erwise t an on superannuation;
°  
  (Sec. 2 r) in relation to an employee, means t e
attainment by t e employee of suc age as is fixed in t e contract or
conditions of service at t e age on t e attainment of w ic t e
employee s all vacate t e employment.
° )(
$
% means all emoluments w ic are earned by an
employee w ile on duty or on leave in accordance wit t e terms and
conditions of is employment and w ic are paid or are payable to im
in cas and includes dearness allowance but does not include any
bonus, commission, ouse rent allowance, overtime wages and any
ot er allowance.
° 
r
#(  
° | e appropriate Government may, by notification, appoint
any officer to be a controlling aut ority, w o s all be
responsible for t e administration of t is Act and different
controlling aut orities may be appointed for different areas.
° 
*
+

( 
° (1) Gratuity s all be payable to an employee on t e
termination of is employment after e as rendered
continuous service for 
 


, -
° (a) on is superannuation, or
° (b) on is retirement or resignation, or
° (c) on is deat or disablement due to accident or diseaseG
° +
 t at t e completion of continuous service of five years
s all not be necessary w ere t e 




 of
any employee is 

 

G
° +


 t at in t e case of deat of t e employee, gratuity
payable to im s all be paid to is 

or, if no nomination as
been made, to is
, and w ere any suc nominees or eirs is a
minor, t e s are of suc minor, s all be 

) 

(   w o s all invest t e same for t e benefit of
suc minor in suc bank or ot er financial institution, as may be
prescribed, until suc minor attains majority. (Sec. 4(1))
° 
. G For t e purposes of t is section, disablement means
suc disablement as incapacitates an employee for t e work w ic e,
was capable of performing before t e accident or disease resulting in
suc disablement.
A  
 +

° Sec. 4 (2) For every completed year of service or part t ereof in
excess of six mont s, t e employer s all pay gratuity to an employee
at t e rate of fifteen days wages based on t e rate of wages last drawn
by t e employee concernedG
° +
 t at in t e case of a piece-rated employee, daily wages s all
be computed on t e average of t e total wages received by im for a
period of t ree mont s immediately preceding t e termination of is
employment, and, for t is purpose, t e wages paid for any overtime
work s all not be taken into account.G
° +


 t at in t e case of [an employee
w o is employed in a seasonal establis ment and
w o is not employed t roug out t e year], t e
employer s all pay t e gratuity at t e rate of seven
days wages for eac season.
° 
 In t e case of a mont ly rated
employee, t e fifteen days wages s all be calculated
by dividing t e mont ly rate of wages last drawn by
im by twenty-six and multiplying t e quotient by
fifteen.
° # 
 
° Non-Seasonal Establis ment ±
° Gratuity Payable =15 days wages x no. of
completed years of service ,(part of a year in
excess of 6 mnt s is counted as one year )
° Seasonal Establis ment ±
° Gratuity Payable=7 days wages x no. of
seasons for w ic employed .
° eaning of wages
° ont ly rated employees G
15 days wages =
(mont ly wages last drawn x 15)/26
° Piece Rated employees
15 days wages = (wages for t e period of 3
mont s /no. of working days in suc a period
)x15 of 3 mont s
° Sec 4 (3) aximum Gratuity G
° Earlier t e amount of gratuity payable to an employee s all not
exceed t ree lak s and fifty t ousand rupees,after
amendement it as been increased to *,,,,,,
° 
*$-% 

 

 
° Notwit standing anyt ing contained in sub-section (1), -
° (a) t e gratuity of an employee, w ose services ave been 


for any act, wilful omission or negligence causing any (

to, or 
 

 belonging to t e employer, s all be
forfeited to t e extent of t e damage or loss so caused.
° (b) t e gratuity payable to an employee may be ) 
forfeited]- -
° (i) if t e services of suc employee ave been terminated for is
riotous or disorderly conduct or any ot er act of violence on is part, or
° (ii) if t e services of suc employee ave been terminated for any act
w ic constitutes an offence involving moral turpitude, provided t at
suc offence is committed by im in t e course of is employment.
° Case lawG
(B arat mines limited vs. regional labor
commissioner )
Any offence involving moral turpitude w ic
is committed by t e employee not in t e
course of employment will not give rig t to
t e employer to forfeit is Gratuity .
ë

° Sec4(1) says t at t e gratuity of a deceased

employee may be paid to is nominee and
nomination as been made t en to is eirs .
° Sec 6 lays down t e 
 
of making
Nomination for t at purpose.
$% ë) r, Eac employee, w o as 







, s all make, a nomination wit in t irty days of t e
completion of one year of service.

$%  

 
(  An employee may, in is nomination,
distribute t e amount of gratuity payable to im under t is Act amongst

 




(3 ë
 (

If an employee as a family at
t e time of' making a nomination, t e nomination s all be made in favor of
one or more members of is family, and any nomination made by suc
employee in favour of a person w o is not a member of is family, s all be
void.
(4) ë
 (
If at t e time of making a
nomination t e employee as no family, t e nomination may be made in favor
of any person or persons but if t e employee subsequently acquires a family,
suc nomination s all fort wit become invalid and t e employee s all make,
in 90 days a fres nomination in favor of one or more members of is family.

(5) .

G A nomination may, subject to t e provisions
of sub-sections (3) and (4), be modified by an employee at any time, after
giving to is employer a written notice in suc form and in suc manner as
may be prescribed, of is intention to do so.
(6) 
 


 If a nominee predeceases t e employee, t e
interest of t e nominee s all revert to t e employee w o s all make a
fres nomination, in t e prescribed form, in respect of suc interest.

(7) 

 
G Every nomination, fres nomination or
alteration of nomination, as t e case may be, s all be sent by t e
employee to is employer, w o s all keep t e same in is safe custody.






 
( 


 

$% A person w o is eligible for payment of gratuity
under t is Act or any person aut orized, in writing, to act
on is be alf s all 
)
 to t e
employer, ) r, for payment of suc gratuity.
* 
 W ere t e date of superannuation and retirement
is known t e employee can apply before 30 days of
superannuation and retirement .
* 
 Nominee can apply wit in 30 days from t e date
is payable.
* 
r Legal eir can apply wit in one year from date it
is payable.
* 
& If t e application filed after expiry of period ±t en
also eligible to get t e amount if s ow sufficient causes
for delay.



 G

$) As soon as gratuity becomes payable, t e employer s all,
w et er an application referred to in sub-section (1) as been made or
not, determine t e amount of gratuity and give notice in writing to t e
person to w om t e gratuity is payable and also to t e controlling
aut ority specifying t e amount gratuity so determined.

$r%| e employer s all arrange to pay t e amount of gratuity ) 
  from t e date it becomes payable to t e person to w om t e
gratuity is payable.

$r%If t e amount of gratuity payable under sub-section (3) is 
by t e employer wit in t e period specified in sub-section (3), t e employer
s all pay, from t e date on w ic t e gratuity becomes payable to t e date
on w ic it is paid, 


 at suc rate, not exceeding t e rate
notified by t e Central Government from time to time for repayment of long-
term deposits, as t at Government may, by notification specifyG
+
 t at no suc interest s all be payable if t e delay in t e payment is
due to t e fault of t e employee and t e employer as obtained permission in
writing from t e controlling aut ority for t e delayed payment on t is ground.]

$*% 
 

(a) If t ere is any dispute as to t e  

(  payable to an
employee under t is Act or as to t e of any claim of, or in
relation to, an employee for payment of gratuity, or as to t e 



 to receive t e gratuity, 


 
) 

(     


 
( 
(b) W ere t ere is a dispute wit regard to any matter or matters specified
in clause (a), t e employer or employee or any ot er person raising t e
dispute may make an 
(  


(
 

(c)] | e controlling aut ority s all, 


'  and after giving t e
parties to t e dispute a 

 

(
,
determine t e matter or matters in dispute and if, as a result of suc inquiry
any amount is found to be payable to t e employee, t e controlling
aut ority s all direct t e employer to pay suc amount .
(d)| e controlling aut ority s all pay t e amount deposited, including t e
excess amount, if any, deposited by t e employer, to t e person entitled
t ereto.
(e)As soon as may be after a deposit is made under clause (a), t e
controlling aut ority s all pay t e amount of t e deposit -
(i) to t e applicant w ere e is t e employee; or
(ii) w ere t e applicant is not t e employee, to t e nominee or, as t e case
may be, t e guardian of suc nominee or eir of t e employee if t e
controlling aut ority is satisfied t at t ere is no dispute as to t e rig t of t e
applicant to receive t e amount of gratuity.

$&%+)

#(
  

For t e purpose of conducting an inquiry under sub-section (4), t e

controlling aut ority s all ave t e same powers as are vested in a court,
w ile trying a suit, under t e Code of Civil Procedure, 1908 (5 of 1908), in
respect of t e following matters, namely G
(a) enforcing t e attendance of any person or examining im on oat ;
(b) requiring t e discovery and production of documents,
(c) receiving evidence on affidavits;
(d) issuing commissions for t e examination of witnesses

$/%
G
Any person aggrieved by an order under sub-section (4) may, )  
from t e date of t e receipt of t e order, prefer an appeal to t e appropriate
Government or suc ot er aut ority as may be specified by t e appropriate
Government in t is be alf.

No appeal from t e employer side will be accepted ,provided t ey are depositing

t e amount equal to t e amount of gratuity payable.

/
*


( 

If t e amount of gratuity payable under t is Act is 



, ) 



 to t e person entitled t ereto, t e
controlling aut ority s all, on an application made to it in t is be alf by t e
aggrieved person, issue a certificate for t at amount to t e #
, w o
s all recover t e same, toget er )  

 t ereon at suc
rate as t e Central Government may, by notification, specify, from t e date
of expiry of t e prescribed time, and pay t e same to t e person entitled
t ereto G
+
 t at t e controlling aut ority s all, before issuing a certificate
under t is section, give t e employer a reasonable opportunity of s owing
cause against t e issue of suc certificateG
+


 t at t e  


 payable under t is section
s all, in no case



 
(  payable under t is Act.
 

+



(1) W oever, for t e purpose of avoiding any payment to be made by imself

under t is Act or of enabling any ot er person to avoid suc payment, knowingly
makes or causes to be made any false statement or false representation s all be
punis able wit imprisonment for a term w ic may extend to   , or
wit fine w ic may extend to 
   

)  
(2) An employer w o 

, or makes default in complying wit , any of
t e provisions of t is Act or any rule or order made t ere under s all be
punis able wit imprisonment for a term w ic s all 

  


  )  



, or wit fine w ic s all not be less
t an 
   

 but w ic may extend to )
   

,
or wit bot G
+
 t at w ere t e offence relates to non-payment of any gratuity payable
under t is Act, t e employer s all be punis able wit imprisonment for a term
w ic s all not be less t an [Six mont s but w ic may extend to two years] and
a finer upto Rs. 20,000
 00000000