Gratuity Payments for 150 Employees: Should We Use LIC or Pay Directly?

If a company has 150 employees, should it go with LIC for Gratuity payments or can it pay directly from its bank account? Is there any mandatory requirement to maintain a fund with an external agency like LIC?

I am enclosing the excerpt of the relevant section for your information:

Compulsory Insurance

(1) With effect from such date as may be notified by the appropriate Government in this behalf, every employer, other than an employer or an establishment belonging to, or under the control of, the Central Government or a State Government, shall, subject to the provisions of sub-section (2), obtain 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).

A reference to the original act is always informative. HR executives must read all relevant Acts and rules like the Gratuity Act, MW Act, etc. Those acts and rules made under the concerned Acts are mandatory reading for any HR to do his/her job properly.

Dear Friend,

Where is the problem? This is good for both employer and employee. You cannot call LIC or any other institutions that have sanctity in the eyes of the law as an external part rather than an integral part, as per the provisions recommended under the act.

Dear Friends,

Before the division of AP into Telangana, by notification, the AP Govt has made it mandatory, subject to the provisions of sub-section (2), to obtain insurance as prescribed for 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).

Please correct me if I'm wrong; other states are yet to follow the same.

Regards,