PAYMENT OF GRATUITY ACT, 1972

 

Object of the Act

To provide certain reward to the employees for a long meritorious service, at the end of their services.

 

Applicability

Every factory, mine, oil field, plantation, port, railways, shop or establishment employing 10 or more employees

Once Act applies, it continues to apply even if employment strength falls below 10.

Eligibility

• Any person employed on wages/salary (irrespective of designation) and completed 5 years of continuous service (except in case of death),shall be eligible for gratuity at the end of their services.

 

Benefits

• 15 days wages (basic + DA) for every completed year of service.

• Maximum gratuity payable is Rs.10,00,000/-

 

Calculation Method

Gratuity = (Basic +DA ) X 15/26 X No. of year of service

 

Forfeiture of Gratuity

Gratuity can be forefeited on termination of an employee

• for moral turpitude or riotous or disorderly behaviour.

• Wholly or partially for wilfully causing loss, destruction of property etc.

 

Display of Notice

Certain notices & abstract of Act are to be displayed at conspicuous place at the main entrance in English language or the language understood by majority ofemployees of the factory/establishment.

 

Nomination

To be obtained by employer after expiry of one year’s service, in Form ‘F’

 

Penal Provision

• Imprisonment upto 2 years or fine upto Rs.20,000 for avoiding to make payment by making false statement or representation.

• For other contraventions of the Act, imprisonment upto one year and/or fine upto Rs.10,000/-