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 or retirement or resignation or 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 case of 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 01.05.2010as 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 offences 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 fraction of year, 1. if the period is more than six months add one more year ( 5 years 8 months = 6 years) and 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 organisation is extending the benefits not less favorable to that of under the Act.
9. Sec. 9: Penalties: Who ever contravenes the provisions of the Act are punishable.
10. Sec. 4A:Compulsory insurance: Employer shall 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:(See attachment)
11. Sec. 10: Protection: No gratuity amount can be under attached under execution of any decree or order, either civil 0r criminal whatsoever.
suggestions / corrections, if any, invited.
Yagniah K
Manager -HR
9703219177