Gratuity is a retirement benefit like Provident Fund or Pension. It is the payment which is intended to help an employee after his retirement. The general principle underlying gratuity schemes is that by faithful service over along period the employees is entitled to a certain amount as retirement benefit. Thus, it is earned by an employee as a reward and meritorious service.
Applicability:
Every factory, Mine, Oil field, Plantation, Port, Railways, Company, shop establishment or educational institutions employing ten or more persons
Definitions
"Employee"
means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
"Employer"
means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop - (i) belonging to, or under the control of, the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive office of the local authority,
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;
"wages"
means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance
Main Provisions
Gratuity Eligibility Criteria:
Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. Thus for an employee to become entitled for the payment of gratuity, he must have rendered continuous service of at least 5 years. The completion of continuous service of 5 years is not necessary where the termination of the employment of an employee is due to his death or disablement.
Wages for calculation:
Gratuity is calculated at the rate of 15 days’ wages for every completed year as if the month comprises of 26 days at the last drawn wages.
Calculation for piece rated employee:
At the rate of 15 days’ wages for every completed year on an average of 3 months wages
Calculation for seasonal employee:
At the rate of 7 days’ wages for every completed year of service.
Employee: All employees irrespective of status or salary.
Qualifying period: On rendering of 5 years of service either on termination or on resignation or retirement.
Entitlement: On completion of 5 years service except in case of death or disablement.
Maximum ceiling: Rs.3,50,000/-
Forfeiture of gratuity:
Gratuity can be forfeited
On termination of an employee for moral turpitude and riotous or disorderly behaviour
Wholly or partly for willfully causing loss destruction of property, etc.,
Protection of Gratuity:
Gratuity cannot be attached in execution of any decree.
Penalties:
Imprisonment for six months or fine upto Rs.10,000 for avoiding to make payment by making false statement or representation.
Imprisonment not less than 3 months and upto one year with fine on default in complying with the provisions of Act or rules.
Applicability:
Every factory, Mine, Oil field, Plantation, Port, Railways, Company, shop establishment or educational institutions employing ten or more persons
Definitions
"Employee"
means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
"Employer"
means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop - (i) belonging to, or under the control of, the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive office of the local authority,
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;
"wages"
means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance
Main Provisions
Gratuity Eligibility Criteria:
Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. Thus for an employee to become entitled for the payment of gratuity, he must have rendered continuous service of at least 5 years. The completion of continuous service of 5 years is not necessary where the termination of the employment of an employee is due to his death or disablement.
Wages for calculation:
Gratuity is calculated at the rate of 15 days’ wages for every completed year as if the month comprises of 26 days at the last drawn wages.
Calculation for piece rated employee:
At the rate of 15 days’ wages for every completed year on an average of 3 months wages
Calculation for seasonal employee:
At the rate of 7 days’ wages for every completed year of service.
Employee: All employees irrespective of status or salary.
Qualifying period: On rendering of 5 years of service either on termination or on resignation or retirement.
Entitlement: On completion of 5 years service except in case of death or disablement.
Maximum ceiling: Rs.3,50,000/-
Forfeiture of gratuity:
Gratuity can be forfeited
On termination of an employee for moral turpitude and riotous or disorderly behaviour
Wholly or partly for willfully causing loss destruction of property, etc.,
Protection of Gratuity:
Gratuity cannot be attached in execution of any decree.
Penalties:
Imprisonment for six months or fine upto Rs.10,000 for avoiding to make payment by making false statement or representation.
Imprisonment not less than 3 months and upto one year with fine on default in complying with the provisions of Act or rules.
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