Understanding Gratuity Limits: Does the 15-Month Rule in Karnataka Co-op Societies Mean No Cap?

Sir,

As per Rule 18(a)(4)(ii) of Karnataka Co-operative Rules 1960, "The maximum amount of gratuity payable to any employee shall not exceed fifteen months' pay under any circumstances."

Does it mean that as per KSC rules the maximum amount of gratuity payable is unlimited subject to the condition of 15 months' pay? i.e., the ceiling limit of Rs. 3.5 lakhs as per the Gratuity Act 1972 does not apply to Co-operative society employees.

The Payment of Gratuity Act 1972 is a Central Act. The Karnataka Cooperative Societies Act is a State Act. Provisions of a State Act cannot override the provisions of a Central Act (unless otherwise enacted). Hence, any establishment where 10 or more employees are employed is governed by the Payment of Gratuity Act 1972. Those cooperative societies which come under the Payment of Gratuity Act 1972 (i.e., less than 10 employees) may pay as per the KCS Act and its Rules. The Payment of Gratuity Act 1972 recommends only better gratuity schemes and not less.

KCS Kutty, Chennai