Comprehensive Guide to Gratuity Act Amendments, Calculation Methods, and Forms

subbuno1000@gmail.com
Dear All,

Can anyone provide the details and process of Gratuity from start to end?

Regards,
Subbiah
Abhijit_Barua
Definition

(b) "completed year of service" means continuous service for one year;

(c) "continuous service" means continuous service as defined in Section 2-A;

(d) "controlling authority" means an authority appointed by the appropriate Government under Section 3;

(e) "employee" means any person (other than an apprentice) employed on wages, [* * *] in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

(f) "employer" means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company, or shop-

(i) belonging to, or under the control of the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,

(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive officer of the local authority,

(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company, or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director, or by any other name, such person;

(g) "factory" has the meaning assigned to it in clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948);

(h) "family," in relation to an employee, shall be deemed to consist of-

(i) in the case of a male employee, himself, his wife, his children, whether married or unmarried, his dependent parents, and the dependent parents of his wife and the widow and children of his predeceased son, if any,

(ii) in the case of a female employee, herself, her husband, her children, whether married or unmarried, her dependent parents, and the dependent parents of her husband and the widow and children of her predeceased son, if any:

Explanation.- Where the personal law of an employee permits the adoption by him of a child, any child lawfully adopted by him shall be deemed to be included in his family, and where a child of an employee has been adopted by another person and such adoption is, under the personal law of the person making such adoption, lawful, such child shall be deemed to be excluded from the family of the employee;

(i) "major port" has the meaning assigned to it in clause (8) of Section 3 of the Indian Ports Act, 1908 (15 of 1908);

(j) "mine" has the meaning assigned to it in clause (j) of sub-section (1) of Section 2 of the Mines Act, 1952 (35 of 1952);

(k) "notification" means a notification published in the Official Gazette;

(l) "oilfield" has the meaning assigned to it in clause (e) of Section 3 of the Oilfields (Regulation and Development) Act, 1948 (53 of 1948);

(m) "plantation" has the meaning assigned to it in clause (f) of Section 2 of the Plantations Labour Act, 1951 (69 of 1951);

(n) "port" has the meaning assigned to it in clause (4) of Section 3 of the Indian Ports Act, 1908 (15 of 1908);

(o) "prescribed" means prescribed by rules made under this Act;

(p) "railway company" has the meaning assigned to it in clause (5) of Section 3 of the Indian Railways Act, 1890 (9 of 1890);

(q) "retirement" means termination of the service of an employee otherwise than on superannuation;

(r) "superannuation," in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service as the age on the attainment of which the employee shall vacate the employment;

(s) "wages" means all emoluments that are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and that are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages, and any other allowance.
prasenjit.mitra
Dear Subbiah,

Please find below:

Applicability:

1. Every factory (as defined in the Factories Act), mine, oilfield, plantation, port, and railway.

2. Every shop or establishment to which the Shops & Establishments Act of a State applies and in which 10 or more persons are employed at any time during the year.

3. Any establishment employing 10 or more persons as may be notified by the Central Government.

4. Once the Act applies, it continues to apply even if the employment strength falls below 10.

Eligibility:

1. Any person employed on wages/salary.

2. At the time of retirement, resignation, or on superannuation, an employee should have rendered continuous service of not less than five years.

3. In the case of death or disablement, the gratuity is payable even if he has not completed five years of service.

Benefits:

1. The quantum of gratuity is to be computed at the rate of 15 days' wages (7 days' wages in the case of seasonal establishments) based on the rate of wages last drawn by the employee concerned for every completed year of service or a part thereof exceeding 6 months.

2. The total amount of gratuity payable shall not exceed the prescribed limit.

3. In cases where a higher benefit of gratuity is available under any gratuity scheme of the company, the employee will be entitled to the higher benefit.

Calculation of Gratuity:

1. Gratuity = (Monthly Salary/26) x 15 days x No. of yrs. of service

2. The maximum gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997).

Penal Provisions:

Nonpayment of gratuity payable under the Act is punishable with imprisonment up to 2 years (minimum 6 months) and/or a fine up to Rs. 20,000/-. Other contraventions/offenses attract imprisonment up to 1 year and/or a fine up to Rs. 10,000.

Forms Related to Payment of Gratuity (Central) Rules, 1972:

1. Form A: Rule 3(1): Notice of opening
2. Form B: Rule 3(2): Notice of change
3. Form C: Rule 3(3): Notice of closure
4. Form D: Rule 5(1): Notice for excluding husband from the family
5. Form E: Rule 5(2): Notice of withdrawal of notice for excluding husband from the family
6. Form F: Rule 6(1): Nomination
7. Form G: Rule 6(3): Fresh Nomination
8. Form H: Rule 6(4): Modification of nomination
9. Form I: Rule 7(1): Application of Gratuity by an Employee
10. Form J: Rule 7(2): Application for gratuity by a Nominee
11. Form K: Rule 7(3): Application for gratuity by a Legal Heir
12. Form L: Rule 8(1)(i): Notice for the payment of gratuity
13. Form M: Rule 8(1)(ii): Notice rejecting the claim for the payment of gratuity
14. Form N: Rule 10(1): Application for direction to the Controlling Authority
15. Form O: Rule 11(1): Notice for appearance before the Controlling Authority
16. Form P: Rule 14: Summons to appear before the Controlling Authority
17. Form Q: Rule 16(1): Particulars of application under Section 16
18. Form R: Rule 17: Notice for the Payment of Gratuity
19. Form S: Rule 18(8): Notice for the payment of gratuity as determined by the Appellate Authority
20. Form T: Rule 19: Application for the recovery of gratuity
21. Form U: Rule 20: Abstract of the Act and Rules

For any further clarification, feel free to write or discuss.
Abhijit_Barua
Dear Friends,

Please find all the forms of POG.
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prasenjit.mitra
Dear Subbiah,

Gratuity: If the amount is received before the completion of five years of service with the employer, it should be taxable. Otherwise, it would be non-taxable up to Rs 10 lakh in the case of non-government servants. For Government service employees, it would be fully non-taxable.
babisolmanraju
Dear all,

Prasenji says that the gratuity ceiling is Rs. 350,000, but V.B. says it is Rs. 1,000,000. Which one is correct according to the existing period?
rahulbhatnet1
Respected Seniors,

Please guide me on the procedure for withdrawing the gratuity amount.

Regards,
Rahul
Abhijit_Barua
Dear Rahul,

If your 5 years are complete, then you just need to apply along with the attached form.

Thank you.
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utkal_nayak
Hi, this is my simple suggestion.

The maximum gratuity payable under the Act is Rs. 100,000/-.

Gratuity = (Monthly Salary / 26) x 15 days x Number of years of service.
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Bhumi Upadhayaya
Hi All,

Thank you so much for sharing information about gratuity. Can anyone guide me on the event of the death of an employee (whether completed 5 years or below 5 years of service in the company), what is the statutory rule for calculating gratuity? I will be highly thankful to you all for sharing your kind suggestions and guidance in this regard.

Thanks and regards,
Bhumi Upadhayaya
Mehrunisa Basima
The calculation will be the same as that of other employees. The only difference is that the limit of 5 years will not be there, and the gratuity amount will be paid to the legal heir of the deceased.
jayantabasak
THE PAYMENT OF GRATUITY (AMENDMENT) ACTS, 2010 (NO.15 OF 2010) [17th May, 2010.]
An Act further to amend the Payment of Gratuity Act, 1972. BE it enacted by Parliament in the Sixty-first Year of the Republic of India as follows:-
In section 4 of the Payment of Gratuity Act, 1972, in sub-section (3), for the words “Three lakhs and Fifty thousand rupees”, the words “Ten lakh rupees” shall be substituted.
Regards,
Jayanta Basak
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