Gratuity Plan Eligibility: How Do We Start the Process as We Hit 5 Years?

Dear Friends, our company is closing in on 5 years now, and I understand we are eligible for the gratuity plan. Could someone advise me on the process to move this forward?

Regards,
Zita

Your query is not clear. Do you want to say that your company is closing now after being in operation for 5 years, or that the company has/will be completing 5 years and you are inquiring about your entitlements under the Payment of Gratuity Act?

Please be specific about your query.

Regards,
Preetam Deshpande

Oh, I am sorry for the typo. What I was trying to mention was that our company has successfully completed 5 years of operations. We would like to introduce Gratuity now, so kindly advise on further proceedings for the same. Once again, my apologies for the typo.

Regards, Zita

Do you want to introduce Gratuity in your organization? This is not clear. Has anybody resigned from your organization who had been working in your company for five years?

You can approach LIC near your place of work to buy a gratuity policy after establishing a Gratuity Trust in your company. This can be done by forming a board of trustees and creating a trust deed. LIC officers will assist in the enrollment and administration of the policy.

I wish to introduce gratuity to the system, so I need to know how to go about the process for the same.

You don't need to introduce gratuity. It applies to all companies, even if the company has not completed 5 years. The only limitation is that it needs to have more than 10 employees. Perhaps you meant you want to formally announce that gratuity is available and how to claim it (on resignation or termination). For that, you can simply display the abstract of the act on your notice board (actually, it's mandatory to do so). If you mean you need to plan for it, then the process is already provided by other members.

"I wish to introduce Gratuity to the system, so need to know how to go about the process for the same."

The Payment of Gratuity Act, 1972 is applicable to (i) every factory, mine, oilfield, plantation, port, and railway company, (ii) every shop or establishment in which ten or more persons are employed, or (iii) such other establishments or class of establishments as the Central Government may issue notification in this regard. I agree with Sh. Banerjee that the Act automatically applies if your establishment fulfills the above conditions. If you are not covered under the Act, you are free to introduce your scheme, but if at any time the number of employees becomes ten or more, you will have no alternative but to comply with the provisions of the Act.

Regards,
BS Kalsi
Member since Aug 2011