Are Hospitals Required to Pay Gratuity to Retiring Staff? Seeking Clarity on Legal Obligations

Coverage of Hospitals Under the Shops and Establishment Act

The hospitals are covered by the Shops and Establishment Act. Earlier, in certain states, the hospitals were exempted from the coverage of this Act following the writ petition given by the managements. It appears that the stay has not yet been vacated in states like Kerala.

Gratuity Provision for Hospital Staff

There are hospitals that are not providing gratuity to the staff upon retirement even after completing continuous service of 5 years. Could any one of our colleagues clarify the coverage and eligibility of the Act regarding hospitals?

Coverage of Shops and Commercial Establishments Under the Gratuity Act

All shops and commercial establishments that were covered under the Shops Act at the time of the introduction of the Gratuity Act would continue to be covered under the Gratuity Act, irrespective of any amendments, repeals, or exemptions brought under the Shops Act. Please note that any notification for exemption under the Shops Act cannot apply to the Gratuity Act. The power to exempt from the provisions of the Gratuity Act lies with the Central Government, and the State Legislature, either by amendment or by notification issued by the executive Government, cannot grant exemption to an establishment from the provisions of the Gratuity Act.

Relevant Sections of the Payment of Gratuity Act

Section 5 of the Payment of Gratuity Act and the definition of the Appropriate Government are relevant here. Employees need to approach the Labour Commissioner with the issue of hospitals declining gratuity to eligible employees. I am sure if the case is well presented, all earlier employees will also receive their due gratuity along with interest.

I am sure that the hospital you are referring to has more than 10 employees, and if that's the case, then it is covered under the Shops & Establishment Act. You may go through the Payment of Gratuity Act Section 1:

Short title, extent, application, and commencement

(1) This Act may be called the Payment of Gratuity Act, 1972. (2) It extends to the whole of India: Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir. (3) It shall apply to- (a) every factory, mine, oilfield, plantation, port, and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; (c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf. [(3-A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act, notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.] (4) It shall come into force on such date as the Central Government may, by notification, appoint.

Thanks and Regards

Dear all,

Please submit your gratuity claim in writing to the management of the hospital by registered post with acknowledgment due. If your claim is rejected, approach the jurisdictional Controlling Authority/Assistant Labour Commissioner, Government of Karnataka, who will adjudicate the matter.

Please initiate this process as soon as possible. It's important to note that hospitals fall under the purview of The Payment of Gratuity Act, 1972.

Thank you.