Gratuity is a statutory benefit paid
to the employees who have rendered continuous service for at least five years.
It is a lump sum amount paid to an employee based on the duration of his total
service. The benefit gratuity is payable to an employee on cessation of
employment (either by resignation, death, retirement or termination, etc) by
taking the last drawn salary as the basis for the calculation. Gratuity is an
important form of social security and is in the form of a gratitude provided by
the employer to the employees in monetary terms for the services rendered by
them to the organization. It is a defined benefit plan and is one of the many
retirement benefits offered by the employer to the employee upon leaving his
job. Gratuity payment liability of the employer tends to increase with an
increase in the salary and tenure of employment.
Payment
of Gratuity Act, 1972
21ST August,
Came into force w.e.f. 16th September 1972.
Applicability of The Act
As
per the Gratuity Act, the scheme for the payment of gratuity is available to:
¨ Firstly he should be employed in an
establishment to which Act applied according to sec1(3)
·
Every factory, mine, oilfield, plantation, port, railway company
·
Every establishment within the meaning of any law, force in relation to
shops and establishments in a State, in which 10 or more persons are employed,
or were employed, on any day of the preceding
12 months;
·
as per the notification of Central
Government in this behalf.
·
Not
apply in J&K pants and mines.
¨ Secondly he
should be employee under Section 2(e)
Employee means any person (other than an
apprentice) employed on wages in an
establishment to do any skilled, semiskilled,
unskilled, manual or supervisory,
technical, or clerical work.
When
Is Gratuity Payable
•
According
to section 4(1) of the Payment of Gratuity Act, 1972 gratuity is paid
after termination of employee after rendering continuous service not less then
5 years:
(a) on his superannuation,
(b) on his retirement or
resignation or,
(c) on his death or disablement
due to accident or disease.
Who
should get if employee dies
In the case of
death of the employee,
Gratuity
payable to him shall be paid to his nominee or,
if no nomination has been made, to his heirs,
and
where
any such nominees or heirs is a minor,
the
share of such minor shall be deposited with the controlling authority (i.e.
government officer) who shall invest the same for the benefit of such minor in
such bank or other financial institution, as may be prescribed, until such
minor attains majority.
Amount
Of Gratuity Payable
•
Basic
pay is divided by 26. The amount so obtained is multiplied by 15 to compute the
amount of gratuity per year.
•
Maximum
Gratuity Payable under Act was Rs. 10,00,000/-
•
Now
maximum Gratuity Payable under Act was Rs.20,00,000/- ( w.e.f. 29 March 2018)
Time
Limit For Payment Of Gratuity
•
The
employer shall arrange to pay the amount of gratuity within 30 days from the
date it becomes payable
•
If
not paid within the period stipulated above employer is liable to pay interest
for the delayed payment
•
Interest
is not payable if the delay was caused due to the fault of the employee and
•
the
employer has obtained permission in writing from the controlling authority for
the delayed payment on this ground
•
If
there is any dispute as to the amount payable or the persons eligible to
receive it the employer shall deposit amount as per his calculation with the
controlling authority.
Appeal
Against The Order Of Controlling Authority
Appeal
if any shall be made within 60 days from the date of the order
Appeal
by employer will not be admitted unless the disputed amount is deposited
Appellate
authority, after giving the parties to the appeal a reasonable opportunity of
being heard, Confirm, modify or reverse the decision of the controlling
authority
Penalities
•
Non Payment Of Gratuity
Imprisoment: 6months -2 years
Fine : 10,000 to 20,000rs or both
•
Fail In Compulsory Insurance
Fine : 10,000rs
For Continuous Offence : 1000rs/Day
No comments:
Post a Comment