Respected all sir, Sir, I want to ask, how employer can make the provision for gratuity payment, under tha Payment of gratuity act? Regards Naresh
From India, Pune
Dear Naresh,
Please refer to sec. 4-A of the PG Act,1972. In the absence of any approved Gratuity Fund under the IT Act,1961, every employer whose the establishment falls under the purview of the PGA,1972 should obtain an insurance policy towards his liability for gratuity to his employees as described in the section.

From India, Salem
Thank You sir for clearing my dobut.
From India, Pune
Dear Umakanthan Sir,
I would like to draw your kind attention to the provision of compulsory insurance under the section 4-A wherein it is written that the employer shall obtain an insurance with effect from such date as may be notified by the appropriate Government in this behalf.
To my knowledge none of the appropriate government has notified in this behalf as on date.
I may be wrong as to the fact or in understanding the section. You may be in better position to throw light on it. Thanks in advance.

From India, Mumbai
What you said is correct Akhil. To my knowledge, AndhraPradesh is the only State that had formulated compulsory insurance rules under section 4-A of the PGA, 1972 so far.
However, apart from big industrial groups like Tatas, Birlas who have constituted their own gratuity funds, many employers subscribe to the LIC Group Gratuity Insurance Scheme.

From India, Salem
Dear Umakanthan Sir,
Greetings on the auspicious day of Ganesh Chaturthi to you as well all the members on this forum.
I also suggest every one to go for Group Gratuity Insurance Scheme irrespective of whether it is compulsory by law or not. I further advise every one to pay some nominal extra premium and opt for life coverage of employees so that in case of early death of any employee, his nominee may be benefited beyond what is due from Gratuity.
From my post #4 above I wanted to confirm the provision of compulsory insurance. Here one question comes in my mind why the government or the governments is / are not very keen of social security of employees when there are Insurance Companies willing to give you the insurance. It's a question of one notification.

From India, Mumbai
Your doubt as well as the question is a genuine and reasonable one. If I remember correct that once the Kerala High Court had pulled up the State Govt when they were going to wake up from the deep slumber in this regard. Even my search of my home State Govt's web site was in vain in this regard. But in my experience I find most of the industrial establishments subscribe to LIC Gratuity Insurance on their own. Perhaps, it may be the reason for such a lackadaisical approach.
From India, Salem
Respected Umakanthan Sir,
Small organisations constitute a Gratuity Fund and keep accumulating it on a monthly basis so that whenever payment is required under PGA, it is made on time to the staff/nominee. I request you to throw some more light on the advantage of having LIC scheme over the gratuity fund.

From India, Chennai
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From United States, Ashburn
Dear friend from CIM-Operations,

Sorry to have missed your post and for my belated response. The LIC collects the annual premium based on the current salary of the employees covered under the policy and disburses the amount based on the last salary drawn when the occasion for payment of gratuity arises. If I remember correct, there is also a policy covering the life of the employee on payment of some additional premium so that in case of death at any time before attaining the age of superannuation, the deceased employee's nominee would get the gratuity as if he had completed the entire service upto the retirement age. Thus this is calculated on actuarial basis, the employer is relieved of the burden of shelling out lumpsum of money at a time. The employees are also assured of gratuity despite the vicissitudes of business. You may visit the web site of LIC or contact any branch for complete details in this regard


From India, Salem

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