Industrial Relations And Labour Laws
Human Resources..
Junior Manager (hr)
Dhanesh Kumar
Recruitment & Payroll
+2 Others

Dear All,
What is the procedure for the payment of Gratuity? Whether does employer directly pay the gratuity amount to employee? or Has an employer to contribute any gratuity fund to Govt. so that the Govt. would regulate the payment of gratuity?
Please let me know how the payment of gratuity will be regulated.? What is the procedure for the payment.?
996 621 6474
24th November 2008 From India, Hyderabad
Gratuity is the amount payable by the employer to an employee when he leaves the company after 5 years of service. As per the Act, the amount becomes due at the time of employee leaving the establishment due to any reason, viz, resignation, superannuation or death. In the case of death, the qualifying phrase of five years of continuous service is not applicable. The amount of gratuity is 15 days average salary at the time the gratuity calculation becomes due for every year of service. While doing so, if there is a fraction of service of six months and more, the same will be taken as one year. as such an employee who leaves after 6 years and seven months will be eligible for seven years gratuity. The maximum gratuity is Rs 3,50,000.

Gratuity is basically an amount payable by the employer himself and for which no contribution either by the employer or employee is required to be made to any public fund. The payment of gratuity may accrue at any time that we can not predict when an employee leaves and the amount is based on the salary of the person at the time of his leaving. However, for superannuation cases, since it is almost known, employers do make a provision for gratuity payment by transferring an amount from the Profit & Loss account or by making suitable investments. But this is to make the things more easy for the employer only.


24th November 2008 From India, Kannur
Dea Mr. Madhu, Thank you very much. I need to have a small clarification, whether gratuity is applicable in case of termination after 5 years. Regards, Vissu
26th November 2008 From India, Hyderabad
If termination is following the provisions of Industrial Disputes Act, 1947, then gratuity is to be paid whereas, if one has been dismissed on charge of gross misconduct proved in a domestic inquiry then no gratuity is payable. In this context please remember that dismissal is different from discharge. The term discharge will include such termination and retrenchment due to any reason beyond the conduct of employee, whereas, dismissal is the last punishment given to an employee for such misconduct for which no punishment less than dismissal shall be given. An employee dismissed shall not get any benefits from the company.
28th November 2008 From India, Kannur
Pls..... go through the attachment reg. gratuity
28th November 2008 From India, Bangalore

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File Type: pdf Gratuity.pdf (69.5 KB, 1090 views)

dear Vishvanath, please refer the attachment fo your reference. dhanesh
28th November 2008 From India, Gurgaon

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File Type: xls gratuity computation(1).xls (24.5 KB, 769 views)

Recently I read in news papers and media that the gratuity ceiling is to raised from the present 3.5 lacs to 10 lacs for private sector employees. Could any one tell the present status of the bill pending in parliament (bcoz parliament session comes to an end somewhere in Mid May 2010). Also Plz. clarify whether the amendment is applicable to Bank employees whose limit at present is only 3.5 lac?
25th March 2010 From India, Madras
the Grautuity amendment bill has been passed by both the houses of Parliament, President of India has to give assent and then ministry will notify the date of effect, when the bill include private sector also definitely banks will also be included. already Government servants and certainPSus have been notified in earlier amendment.
21st May 2010 From India, Madras
Thanks mr.vasudevan. Kindly also clarify whether the date of effect will be a prospective date or retrospective date? If retrospective, what would be the date of effect and what the criteria govt.of india has for fixing the retrospective date? Can any body in the fora clarify?
23rd May 2010 From India, Madras
the gazette notification has been issued and effective from 24th may 2010. please all of you send letters to ministry to give effect from 01 jan 2006 as was given for Government servants
28th May 2010 From India, Madras

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File Type: pdf Gratuity Act (Gazette Notifications) .pdf (726.5 KB, 206 views)

It is okay that Government has now notified that the date of effect is from 24th may 2010. However it remains a moot point as to who decides the date of effect and what is the criterion -all seem hazy. Parliament nods okay. But why the same parliament is silent about of date of implementation and why such powerful parliament shrugs its responsibility of date of effect or implementation. A man or woman retiring on 24th gets rs. Ten lacs and a man or woman retiring a day(or a month) earlier gets short of six and half lacs. He or she would be in tears. This is pathetic.Instead of a quantum jump from 3.5 lacs to 10 lacs a step by step increase as per the year of retirement may be implemented.
T.K.Chandrasekaran, SBI, Chennai 7024.
8th June 2010 From India, Madras
The thread was started in 2008. Now the maximum amount of gratuity as per the Act is Rs 10 lakhs and not Rs 3.5 lakhs. Madhu.T.K
4th November 2012 From India, Kannur
dear, As relevant information is already provided by other contributors, i would jus like to add that max gratuity payable is now revised to be 10,00,000 Rs and it is tax exempted...
5th November 2012 From India, Asansol
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