Understanding Gratuity: What Steps Should We Take for Our New Permanent Employees?

Hi,

We have just confirmed some operators in our company roll as permanent employees in our plant. I want to know all the processes regarding Gratuity, such as:
- What is the process?
- With whom do we have to approach?
- Where to make the deposit?
- Where do they have to submit their Nomination Form?

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I require your valuable information.

Thanks,
Rajesh Patil

Rajesh,

Gratuity is an amount payable by the employer when an employee leaves employment after at least 5 years of service. The amount payable depends upon the salary of the employee at the time of his leaving and the length of his service. The date of joining and not the date of confirmation is to be taken for calculating gratuity. There is no nomination or deposit of amount. However, in order to find funds available for payment of gratuity, the employer can take any mutual funds specifically made for this purpose. Please contact any service providers in this regard. Please note that the payment of gratuity is to be done by the employer and no amount shall be deducted from the salary of the employees towards such funds.

For details, please check the other forums, especially the "Labour & Employees Relations Forum" of citehr.

Regards, Madhu.T.K

Thank you, Madhu, for your help.

I have a clarification. I heard that we need to approach LIC for the gratuity process or collaborate with LIC for the gratuity process. Is this true?

My second question is, to which department should the gratuity nomination forms and any other forms (if required) be submitted? Does this have anything to do with government authorities, like our PF?

Please assist me with this as it is my first time encountering such situations.

Warm Regards,
Anil Kumar
9901289372
Anil.anchor@gmail.com

The gratuity matters are dealt with by the state labor department. You can collect nominations from employees who have rendered a service of at least one year. The nomination shall be in Form F. The same need not be sent to the Labor Department but should be available with you for inspection.

When an employee who is eligible for gratuity leaves, you can collect his gratuity claim in Form I. Similarly, once the amount of gratuity is processed (it is mandatory that the amount should be paid within 30 days of his leaving), you can send the intimation in Form L.

Please find the attached forms.

Regards,
Madhu.T.K