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Thread Started by #s.anitha

Hi All,
My company’s strength is 30 members as of now, shell I go for Gratuity Act? Company has started in the year 2003 May.
Can I get the information on gratuity form PF Office?
Pls help me in this.
Thanks
Anita
21st November 2007 From India, Bangalore
HI Anitha,
Since your company started in May 2003, the employees will become applicable to get a gratuity after end of Five years of continous service.
Also tell me your organisation is registered under which act , means factory Act, Shops & establishment etc. You need to see the applicability of the act for your Organisation.
Also u can go through the Gratuity Act for additional information. PF dept will not help you in Gratuity.
Enjoy,
Harshad
21st November 2007 From India, Mumbai
Dear Anitha
Greetings
You have to understood the fact that Gratuity is not coming under the purview of EPF Act. It is a separate legislation applicable to all the company having more than 20 employees.
Eligibility of Gratuity will only arise only in case of resignation / termination / discharge of an employee and that too gratuity is eligible only for employee who has completed 5 years of service in a company.
It is based on 15 days salary per year of service. The max amount of Gratuity that one can get is Rs.3.5 lakhs.
More inputs i can share if you require.
Cheers
Trisha
HR Professional

21st November 2007 From India, New Delhi
Hi
thanks for your quick response.
my company is registered under Shops & establishment act.
and for gratuity i need details like
Application form, Registration details ets. where i can find this.
thanks once again
:) :) :)
Anita
21st November 2007 From India, Bangalore
Hi, Take book for Gratuity Act 1972. You will find answer for all quaries. The Act will be applicable to our organisation since u are registered under Shop & Establishment Act. Enjoy, Harshad
21st November 2007 From India, Mumbai
Dear Anitha
There is no need to register. But there are additional benefits available with LIC of india under Group gratuity scheme which is a seperate procedure can be explained by any Business devept manager of LIC.
As regard to forms you have to buy Gratuity act book and where the model forms available at the end of act and rules.
Cheers
Trisha
HR Professional

21st November 2007 From India, New Delhi
Hi Anita,

There is no registration required for gratuity. It is mandatory from the employer to pay the gratuity @ 15 days basic + DA salary for every year of service completion. An employee becomes eligible to get the gratuity once he completes 5 years of service. Even if the employee leaves the company one day before the completion of 5 years, he is not eligible for gratuity.

To maintin this fund, you need to form a Gratuity Trust and the Directors, HR In-charge nd Accounts In-charge may become the trustees.

If you don't want the headache of starting the trust and maintain the fund etc, there are financial institutions, banks, Insurance companies are maintaining the gratuity fund on behalf of the company. You can contact them. If you need any help on good institution for maintaing the fund do let me know, I can help you out by recommending a good company.

Regards,

Umesh.S

Note: May I know your qualification? Because this is one of the act every HR person should know. There are lot of bare act books are available in the book shops with less cost (say Rs.5/- or Rs.10/- per act or combination of labour act within the cost of Rs.50 or Rs.75/-) Please make use of it. Sorry if I have hurted you by saying this.
21st November 2007 From India, Bangalore
Hi Trisha,
thanks for the reply, i dont have any prob in EPF, and i know Gratuity is totaly different from EPF,
actually some time back i spoke to one person, he is in gratuity dept in canara bank, and he told me the all the application form you can collect from PF office only. so i had a doubt. and i am here to clear my query.
Anita
21st November 2007 From India, Bangalore
Dear Anita

Greetings!

I too agree vth umesh.

Applicability

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

Wages for Calculation

@ 15 days’ wages for every completed year as if the month comprises of 26 days at the last drawn wages.

Qualifying period

On rendering of 5 years’ service, either termination, resignation or retirement.

Employee

All employees irrespective of status or salary

Entitlement

On completion of five years’ service except in case of death or disablement

Nomination

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

Maximum Ceiling

Rs.3,50,000

Statuory Compliance Forms

S.No Type & Nature Of Document Description Of the Form

1 Form A Notice Of Opening

2 Form B Notice Of Change

3 Form C Notice Of Closure

4 Form D Notice for excluding husband from family

5 Form E Notice of withdrawal of notice for excluding husband from family

6 Form F Nomination

7 Form G Fresh Nomination

8 Form H Modification Of Nomination

9 Form I Application for gratuity by an employee

10 Form J Application for gratuity by a nominee

11 Form K Application for gratuity by a legal heir

12 Form L Notice for payment of gratuity

13 Form M Notice rejecting payment of gratuity

14 Form N Application for direction

15 Form O Notice for appearance before the controlling authority

16 Form P Summons

17 Form Q Particulars of application under Section 7

18 Form R Notice for payment of Gratuity

19 Form S Notice for payment of Gratuity as determined by appellate authority

20 Form T Application for recovery of gratuity

21 Form U Display of abstract of the act and rules

Hope this helps u to some extend

Rgds,

John N
21st November 2007 From India, Madras
Hi John/ Umesh, greetings :) :) :) :) thanks for the response, Umesh pls let me know the institution who can help me in maintaining these a/C. Have a gr8 time :) Anita
21st November 2007 From India, Bangalore
John,
I had heard that the rule of being five years with the organization was being contemplated and was thinking of redcuing the period ! So please let me know if there ia nything such thing in process or being debated over
Cordially,
preet
22nd November 2007 From India, Bangalore
Hello Trisha,
I have read at some other site that the sealing of Gratuity has been increased. Is that true ?
If yes, do you have the Copy of G.O. or press release of the same ?
If you have then please provide the copy G.O.
Thanks n regards,
Purshottam Saini
22nd November 2007 From India, Calcutta
Dear Saini Greetings. To my knowledge the ceiling of Gratuity that one can get is not more than Rs.3.5 lakhs. There is no fresh amendment in this act Cheers Trisha HR Professional
22nd November 2007 From India, New Delhi
True, Till now the limit is fixed at 3,50,000. This is the last amendment in this act. I have not heard of any other amendment till so far Regards, Nilendra
22nd November 2007
hi
the gratuity is for the employees those have completed their five yrs. of contineous service / uninterupted service in the organisation are eligible.
so your company is new after few days all the employees whose 5 yrs. of service completed are eligible.
the max. amt. of the gratuity is Rs. 3,50,000
the gratuity is calculated @ 15 days salary for his completed services.
Narayan
22nd November 2007 From India, Pune
Hi Purushotam Saini,
As far as Gratuity act is concerned the maximum limit is Rs.3,50,000/-. But however, if the management wishes to give more than the maximum limit they can give, but the amount paid over and above Rs.3,50,000/- is taxable.
Regards,
Umesh.S
22nd November 2007 From India, Bangalore
Hi Saini Agree with Umesh. In our organisation, fund is maintained with LIC and there is no ceiling on Gratuity. Amount paid as Gratuity above than 3.5 lacs is taxable. Kayal
22nd November 2007
Hi All,
I think everyone has given their views on this and surely Anitha would have gain the knowledge out of it.
I would like to point out only one thing, which Mr Umesh have said in his post
that "Even for less than 1 day for 5 yrs. the gratuity is not payable"
But i think, in fifth year if the employee has worked for minimum 240 days or more than that would be eligible to get the gratuity claim for total 5 yrs. The notification is also available for this rule.
I know this because we have paid the gratuity to one of our employee in the same condition. He only produced the same.
Guys, pl. do update urself on this.
Thanks,
Amit
22nd November 2007 From India, Mumbai
Hi Amit,
Thanks for your update. The rule which I have mentioned is as per the meeting when we had with Dy.Commissioner of Labour, who is handling the gratuity. But it was some time ago. May be later on there may be a notification in this regard. If you could post the notification scan copy here it would help us in updating ourself.
Thanks & Regards,
Umesh.S
23rd November 2007 From India, Bangalore
Hi Amitshah,
I completely agree with you about the number of days that you have mentioned as 240 days. I would like to know if an employee works for 9 years and in the last 2 years if he as not worked minimum of 240 days than in such a case will he get his Gratuity for only 7 years or complete 9 years. In such a case may be it is left to company but what does the Law says, can anyone clarify me on this.................
Regards
Amith R.
23rd November 2007 From India, Bangalore
Dear Amit,
Gratuity act says that in the last year of service if the employee has worked for more than 6 months then it will be treated as one full year. Its clear that 7 months has 210 days. So, in his last year he is not working for 240 days but he will be given gratuity for that year.
In calculation of gratuity, the formulais 15 days average salary for every completed year of service.
Moreover, "completed year of service" means continuous service year of one year.
Hence, in your case, If in the last year he has worked for more that 6 months he will get gratuity for same, but for the penultimate year it has to be seen with reference to section 2D of the act whether the employee has worked for 240 days or not.
If he has worked for more than 240 days it will be termed as completed year of service else not.
Comments from others will be appriciated.
Regards,
Nilendra
23rd November 2007
Hi Nilendra,
ya, u r right. (Gratuity act says that in the last year of service if the employee has worked for more than 6 months then it will be treated as one full year).
thanks every one for giving your views. it is a nice feeling being in cite HR :) :) :) :) :)
Anita.
23rd November 2007 From India, Bangalore
Hi Umesh, u told that u will refer me some institution for Gratuity. kindly do the needful, Anita
23rd November 2007 From India, Bangalore
Hi Anita, I have sent you the details through PM. Please check otherwise I will send it again. Regards, Umesh.S
23rd November 2007 From India, Bangalore
Yes Sowmya,
According to Gratuity Act Section 4, Insurance has to be obtained for payment towards gratuity from LIC or any other prescribed insurer or have an approved gratuity fund. The premium is annual in nature(If premium can be monthly, pl let me know).
Regards,
Nilendra
23rd November 2007
Could you please tell me about Section 4-A (Payment of Gratuity Act1972) Comulsary Insurance
23rd November 2007 From India, Noida
Dear Vipin,

pl find the relevant portion of the act:

4A. COMPULSORY INSURANCE. - (1) With effect from such date as may be notified by the appropriate Government in this behalf, every employer, other than an employer or an establishment belonging to, or under the control of, the Central Government or a State Government, shall, subject to the provisions of sub-section (2), obtain an insurance in the manner prescribed, for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation of India established under the Life Insurance Corporation of India Act, 1956 (31 of 1956) or any other prescribed insurer : Provided that different dates may be appointed for different establishments or class of establishments or for different areas.

(2) The appropriate Government may, subject to such conditions as may be prescribed, exempt every employer who had already established an approved gratuity fund in respect of his employees and who desires to continue such arrangement, and every employer employing five hundred or more persons who establishes an approved gratuity fund in the manner prescribed from the provisions of sub-section (1).

(3) For the purpose of effectively implementing the provisions of this section, every employer shall within such time as may be prescribed get his establishment registered with the controlling authority in the prescribed manner and no employer shall be registered under the provisions of this section unless he has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred to in sub-section (2).

(4) The appropriate Government may, by notification, make rules to give effect to the provisions of this section and such rules may provide for the composition of the Board of Trustees of the approved gratuity fund and for the recovery by the controlling authority of the amount of the gratuity payable to an employee from the Life Insurance Corporation of India or any other insurer with whom an insurance has been taken under sub-section (1), or as the case may be, the Board of Trustees of the approved gratuity fund.

(5) Where an employer fails to make any payment by way of premium to the insurance referred to in sub-section (1) or by way of contribution to an approved gratuity fund referred to in sub-section (2), he shall be liable to pay the amount of gratuity due under this Act (including interest, if any, for delayed payments) forthwith to the controlling authority.

(6) Whoever contravenes the provisions of sub-section (5) shall be punishable with fine which may extend to ten thousand rupees and in the case of a continuing offence with a further fine which may extend to one thousand rupees for each day during which the offence continues.

Explanation : In this section "approved gratuity fund" shall have the same meaning as in clause (5) of section 2 of the Income-tax Act, 1961 (43 of 1961).

Regards,

Nilendra
23rd November 2007
Dear Ms Anitha :
In addition to Ms Trisha's comments indicating gratuity payable after 5 yrs on termination/retirement, etc, I think in case of death of an employee during service, the condition of completion of 5 yrs does not arise.
Rgds
:: Dhinakaran
23rd November 2007 From India, Hyderabad
Dear All Lot of interesting inputs have srung up on Gratuity .All are well informed on this topic. With Regards V.Sounder Rajan
23rd November 2007 From India, Bangalore
Hi friends,
Kindly let me know how can the various forms for Gratuity be got? Also is it compulsory for a company to get registered with the Gratuity.. If the company does not get themselves registered, then is there any legal proceedings..
Thanks
Sowmya
24th November 2007 From India, Madras
Dear Sowmya
Greetings.
There is no registration formality is there for Gratuity. All forms pertaining to Gratuity are available in the Act Book itself.
You can link the Gratuity with LIC for getting additional benefits for which you have to form Trust and lot of registeration formalities are there which will be explained by Business devpt manager of LIC.
Cheers
Trisha
HR Professional

24th November 2007 From India, New Delhi
Hi Trisha Thanks a lot... But kindly let me know is there any offence if the company is not in the practice of providing gratuity to its employees. Thanks Sowmya
24th November 2007 From India, Madras
Dear Sowmya
Greetings.
There is no offence in not providing Gratuity. But what makes offence is when an employee resigns after completing of five year of service, you are not disbursing the Gratuity amount.
But nowadays, management think of money outflow in case of more no of resignations in a year, hence they plan with LIC where a premium would be remitted based on the members age, service, salary drawn and whenever an employee resigns LIC will take care of settlement.
Cheers
Trisha
HR Professional

24th November 2007 From India, New Delhi
Hi Anita

Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years and on his retirement or resignation, if there is any 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. For every completed year of service, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned

But in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.

The amount of gratuity can not exceed more than 3.5 lakh rupees.The gratuity payable to an employee may be wholly or partially cancelled, if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part.
24th November 2007 From India
Hi All,
Enforcement of Gratuity Act falls under Labour department of respective state.
If any establishment registered under shops and establishment act or factory act with employee strength of 20 or more.
You can download the attached files for further readings. It has Gratuity Act. I also sending a file that has extract of all labour laws. I got this file in this forum. I am sure it will benefit all.
If someone need any Labour laws please let me know. I am willing to share it.
Rgds
vishwanath
24th November 2007 From India, Bangalore

Attached Files
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File Type: doc labour_laws_309.doc (203.5 KB, 510 views)
File Type: pdf gratuity_184.pdf (74.5 KB, 863 views)

Dear Anita, Please get in touch with the Controlling Authority under Payment of Gratuity Act for your region. You will have to apply before him for registration. Regards, Shantonu
24th November 2007
hi all,
At the moment you just need to submit Form "A" at labour office, its a intimation to labour office, opening of a new establishment, then get Form "F" from each employees, its a nomination form it a mandatory to fill up this form, the gratuity is payable when employee resigns or at retirement. For further information you are free to take advice.
26th November 2007 From India, Mumbai
Dear Trisha,
I hav query that you told employes salary of 15 days of per year if employe get a increment three time in year than how we will calculate the 15 days salary I think we will see how much we paid in a year and divide by that by 365 after that multiply by 15 Am I right pls. explain.
Regards,
Arti
28th November 2007 From India, New Delhi
Dear Arti
Greetings.
Though you have given three times increments, you have to calculate gratuity based on last month salary drawn, otherwise, updated salary and the calculation is as follows.
Rs.10000/-(Basic salary) X 15/26 X No of years of service.
Less than 6 months of service shall be omitted and more than 6 months shall be rounded off to one year.
Any doubt you can address your queries to this thread.
Cheers
Trisha
HR Professional

28th November 2007 From India, New Delhi
Yes , You can.
Contact the group business division of any of the life insurance companies who has fairly large funds under management ( HDFC std life, ICICI pru,LIC, SBI life or TATA AIG) in your city. They will help you with the valuation of your liability and funding options and documentation for trust formation and CIT approval of the gratuity fund/trust.
In case you need further assistance write to me at
28th November 2007
hi anita
gratuity act every employee eligable for a gratuity when he compleated five year in a company then he is eligable for a gratuity amount .and the formula is basic+da * number of years*15/26
regards
mukesh
28th November 2007 From India, Gurgaon
Hi friends, Is it mandatory for a company to provide gratuity for its employees or is it based on the company’s policy... Kindly let me know... Thanks Sowmya
5th December 2007 From India, Madras
Dear Umesh,
I woild like to know the procedure of Forming a Gratuity Trust at our end (ie : Company) & not with any Financial Institution,Bank Or LIC
1. How to Register the Gratuity Fund and where
2. Is there any requirement to deposit Premium (Monthly / Yearly)
3. Any format to Form Gratuity Trust.
4. Where to submit the Trust Deed etc
5. Is it mandatory to take Insurance from LIC of India for the liabilities of the employee's , even after managing the Gratuity Fund by company (Pls go through - Section 4A of gratuity Act'1972)
I will be thankful, If you could mail me entire procedure of forming a Gratuity Trust & Registering the same with the controlling authority at
Warm Regards
JK
23rd September 2008 From India, Pune
if the time closer of the company, employee tenure with company not more than 4 years and above . how claculate gratuity
24th September 2008 From India, Vadodara
Hello Dear Anitha this is venkatesh , Asst. Manager-HR, Chennai This is not a big problem rgds, venkatesh G 9884321474
11th December 2008 From India, Madras
Dear Yashaswani,
Under the Payment of Gratuity Act,1972 the nominee can claim gratuity amount from the employer in case of death of an employee who have completed one year of continuous service.
Regards
R.N.Khola
Sr Associate

2nd April 2009 From India, Delhi
Hi,
I would like to have solution on few queries of gratuity:
1. Is gratuity applicable to a proprietory firm not registered under shop & establishment act.
2. Its not mentioned as part of CTC than too does an employer is liable to pay to employee on completion of 5 yrs on service in organisation
3. Is there any statutory body where in the company has to pay the amount of gratuity or company pays directly to an employee.
Awaiting your reply you can mail me at
8th April 2009 From India
Would llike to know few details about gratuity:
Is it mandatory in proprietorship firm which is not registered under shop and establishment act
Is there any Statutory body or financial institution where in the company has to pay the gratuity or it can directly pay to its employee on completion of 5 years of service in organisation.
You can mail at
Awaiting your reply
Regards,
Rina
8th April 2009 From India, Mumbai
Dear Rina,

This is for your information that this act is applicable to every shop or establishment within the meaning of any law for the time being in force in relation to a shop & establishments in a state in which 10 or more persons are employed or were employed on any day of preceding twelve months. In this is way what is necessary is the coverage under shop Act & employment of 10 persons. If the shop is not regd. under the shop Act then this will not effect the right of the employee to have gratuity. This amount can be directly paid to the employee. It is not necessary to pay the installment to any financial institution.

Hope this clarifies your query.
Regards,
R.N.Khola
Sr.Associate
Skylark Associates, Gurgaon
(Labour Law & Legal Consultants)
09810405361
10th April 2009 From India, Delhi
Dear Anitha,Pls find attached the important forms to start with Gratuity compliance.Form A - Notice of Opening.Form U - Abstract to be displayed at prominent place.Form F - Nomination to be received from all employees completed 1yrs service.Form I - Appln by employee for claiming benefit.Abstract for better understanding of the Act.If in case you find difficult to maintain the compliance, you can approach the below third party Insurance companies for Group Gratuity plan, which will ease your operations.LICMaxNewYork LifeINGRgds,Suresh RamalingamManager - Compliance
10th April 2009 From India, Mumbai

Attached Files
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File Type: doc FORM 'A'.doc (24.5 KB, 702 views)
File Type: doc Form 'U'.doc (45.0 KB, 575 views)
File Type: doc FORM I(Application for Gratuity by an employee).doc (21.0 KB, 693 views)
File Type: doc Gratuity - Bare Act.doc (57.0 KB, 651 views)
File Type: xls FORM - F (TN Payment of Gratuity Rules, 1973).xls (24.5 KB, 970 views)


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