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The Payment of

Gratuity
Act,1972.
Vijayarajan
Skill Zone, Kannur.
Mob: 9447014166

11
History

The Kerala industrial Employees Payment of Gratuity


Act,1970 is the first legislation in India which made the
payment of Gratuity a statutory one.
The West Bengal Govt. also thought of bringing a
similar legislation in June 1971.
Since both the legislations were identical, the central
govt. discussed the issue in the labour Ministers
conference and the proposal was unanimously
approved.

22
The payment of Gratuity Act, 1972
came into force wef 16-9-1972
[ Notification issued under sec. 1(4)
of the Act, vide S.O. 601(E) dated 16-
9-’72 published in Gazette of India
extra ordinary 1972,Part II sec. 3(ii)
page 1641.

33
Applicability [Sec. 1(3)]

Every factory, mine, oilfields, plantation port and railway company.


Every shop or estt.covered under the S&E act, in which ten or more persons are employed.
Such other estts. Notified by the central govt. in which ten or more persons are employed. (clubs, chamber of
commerce, inland water service, solicitors office, Local bodies, etc.has been notified during several occasions.]

44
Employee [Sec. 2(e)]
All persons in an estt. To which the Act applies, to do any
skilled, semi skilled, unskilled, manual, supervisory,
technical, clerical, managerial, administrative,
irrespective of their salary are employees.
Original position
Rs 1000 till 1-7-’84.
Rs 1600 till 1-10-87.
Rs 2500 till 1-12-’92
Rs 3500 till 24-5-’94
Wages limit was lifted as per Act 34 of 1994.

55
Wages [Sec 2(s)]

All emoluments including DA


which are actually paid or
payable.
Bonus, commission, HRA, over
time allowance etc does not
come under the term wages.
66
Gratuity Shall be payable

On superannuation.
On resignation / retirement.
Death or disablement due to
accident or disease.

77
Eligibility

Except in the case of death


or disablement, the
employee shall be eligible
to gratuity only on
completion of 5 years.

88
Calculation
The rate of gratuity is 15 days wages (last drawn by the
employee) for every completed year of service or part
thereof in excess of 6 months.
In respect of seasonal establishments, the rate of gratuity
is 7 days wages for each season.
In respect of monthly paid employees salary will be
divided by 26to find out one days wages.
In respect of piece rated employees the average of the
total wages earned during the last three months will be
taken.

99
Maximum Amount of
Gratuity.
Originally the maximum was 20 months wages.
From 1-10-’87 it was limited to Rs. 50,000/-
From 24-5-94 it was enhanced to Rs.1,00,000/-
From 24-9-97 it was enhanced to Rs.3,50,000/-
and this is the latest and prevailing position.

1010
Forfeiture of Gratuity

Gratuity can be wholly or


partially forfeitured under the
circumstances mentioned in
Sec.4(6) of the Act. This shall
be made only after giving
notice to the employee.

1111
Duties of Employee
On completion of one year every
employee should file a nomination in
Form F to his employer. The
nomination shall be in favour of one
or more members of his family as
defined under Sec 2(h) of the Act.
[Sec.6, Rule 6(1).]
Employee shall submit an application
in Form I to his employer within 30
days from the date of gratuity
becomes payable. 1212
Obligations of Employer
The employer shall determine the amount of gratuity as soon as it becomes payable.
[Sec.7(2)]
The employer shall pay gratuity within 30 days of it becomes payable. [Sec.7(3)]
The employer shall be liable to pay simple interest @ 10% for delayed payment.
[Sn.7(3A) read with notification S.O. 873(E) dated 1-10- 1987.]

1313
Claims
If the gratuity is not paid by the employer, the
employee can file claim before the controlling
authority in Form N. within 90 days of the
occurrence of the case. The controlling authority
has the power to accept the delayed application
on satisfactory reasons. Application for
condonation need not be in writing. Just
explanation is sufficient. [Sec.7(4),(5),&(6) read
with decisions of the Hon. Courts LLJ page 674 of
1993 (1)]

1414
Duties of Controlling
Authority.
On receipt of the application, the C A shall issue a
notice to the parties in Form O.
He can summon witnesses examine documents,
like a civil court.
After hearing the parties he shall pass an order
The copy of orders shall be sent to the parties
together with a direction in Form R.
A record of these files should me maintained in
Form Q
1515
Appeals
Appeal by the aggrieved party should be filed within
60 days of receipt of the orders of the C A.
Delay up to a maximum period of 60 days can be
condoned by the appellate authority on valid
grounds. [Proviso to Sec 7(7)] Appellate authority
has no powers to condone the delay in excess of 60
days. [Page 41 of LLJ 1987 (1)]
Appeals should also be decided as in the case of
appeals in a civil court.

1616
Recovery

If the amount of gratuity is not paid in


spite of the orders of the CA / Appl
Authority the claimant shall apply in
form T to the CA for recovery of the
amount. The CA shall issue requisition
to the Dt. collector recover the
amount under R R Act. [Sec.8,Rule
19]

1717
Inspectors

Sections 7A and 7B deals with the


appointment and powers of Inspectors.
As per GO (MS) 57/2001/LBR dated 17-
10-2001, the Deputy Labour Officers,IALs
and ALO Gr I and as per GO (MS)
18/2003/LBR dated 12-5-2003 the CIP
and IPs are appointed as Inspectors

1818
Attachment of Gratuity

Section 13 prohibits the attachment of


Gratuity by any civil ,criminal or revenue
courts.
The Hon. High court of Kerala has held that
the courts has no power to issue injunction
for withholding payment of Gratuity. [LLJ
page 422 1993(1)]

1919
Thank You,

Vijayarajan,
Skill Zone, kannur,
2020