Gratuity Act at a Glance:
1. Sec. 2e: Employee means a person employed on wages (other than an apprentice).
2. Sec. 2s: Wages means Basic + DA.
3. Sec. 4: Gratuity shall be payable on the termination of the employee, i.e., superannuation, retirement, resignation, death, or disablement due to accident/disease, to an employee who has rendered continuous service for not less than five years. This continuous service of five years is not applicable in the case of the death of an employee.
4. Sec. 2A: Continuous service means 240 days.
5. Sec. 4(3): The amount shall not exceed Rs. 10 lakhs (wef 01.05.2010 as amended).
6. Sec. 4(6): The gratuity can be forfeited to the extent of the damage caused to the company when any employee's services are terminated on that misconduct. Secondly, the entire amount can be forfeited where the employee's services are terminated on the offenses of moral turpitude during the course of employment.
7. Sec. 4(2): Computation: (Basic + DA / 26) x 15 x number of completed years of services. In case the service is a fraction of a year:
- If the period is more than six months, add one more year (5 years 8 months = 6 years).
- If the period is less than 6 months, limit to the completed years of service (5 years 5 months 15 days = 5 years).
8. Sec. 5: Exemption: In case such organization is extending the benefits not less favorable than that under the Act.
9. Sec. 9: Penalties: Whoever contravenes the provisions of the Act is punishable.
10. Sec. 4A: Compulsory insurance: Employers shall obtain insurance in the manner prescribed for their liability for payment towards 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. (See attachment)
11. Sec. 10: Protection: No gratuity amount can be attached under execution of any decree or order, either civil or criminal whatsoever.
Suggestions/corrections, if any, invited.
Regards,
Yagniah K
Manager - HR
[Phone Number Removed For Privacy Reasons]