What Do the Karnataka Compulsory Gratuity Insurance Rules, 2024 Mean for Employers?

Karnataka Compulsory Gratuity Insurance Rules, 2024

The Government of Karnataka on 10th January 2024 notified regarding the Karnataka Compulsory Gratuity Insurance Rules, 2024. The rules are made under the powers conferred by the Payment of Gratuity Act, 1972. The rules primarily focus on compulsory insurance for the payment of gratuity to eligible employees.

Requirements for Employers

New employers and existing establishments are required to obtain a valid insurance policy from a recognized insurance company within specific timeframes and renew it periodically. They must register their establishments with the Controlling Authority and provide details of the employees insured, along with any changes in the future.

Notification Details

The notification includes various forms for application, the option to continue existing insurance schemes, details of employees covered under compulsory insurance, and the register of establishments under compulsory insurance. Employers are mandated to comply with the provisions of the Act, exercise due diligence for on-time payment of premiums, and ensure the fulfillment of their liabilities under the Act.

In summary, the Karnataka Compulsory Gratuity Insurance Rules, 2024, outline the mandatory requirements for employers to obtain insurance for the payment of gratuity to eligible employees and ensure compliance with the provisions of the Payment of Gratuity Act, 1972.

Thank you for sharing the news of the notification of Section 4A(1) of the Payment of Gratuity Act by the Karnataka state. Now, all establishments covered by the Payment of Gratuity Act are required to buy an insurance policy or invest their gratuity amount in LIC or other approved insurers.

I have a query related to it. The notification has come from the Karnataka government, right? In respect of establishments having branches in other states, the appropriate authority will be the Central Government, right? Then, will this notification cover such establishments whose appropriate government is Central and the Controlling authority is the ALC(C)?

What will be the legal position for companies having branches outside Karnataka whose appropriate government is not the Karnataka State government but it is the Central Government?

That means companies which have registered offices in other states but are working in Karnataka, and those which are not registered as 'companies' but as partnerships or proprietorships, need not take insurance as mandated by section 4A(1).

Request for Karnataka Compulsory Gratuity Insurance Rules, 2024

Can you please share the Rules (Karnataka Compulsory Gratuity Insurance Rules, 2024) here? Under the similar Rules framed by Andhra Pradesh, no such mention about ROC was made. Can you please clarify?

If you refer to Sub-Section 1 of Section 4A of The Payment of Gratuity Act 1972, which is reproduced below:

"(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 their 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) or any other prescribed insurer."

In the above subsection, the line "every employer, other than an employer or an establishment belonging to, or under the control of, the Central Government or a State Government," pertains to the current scenario being the Karnataka Government. For further information, you may reach me at [Phone Number Removed For Privacy-Reasons].

Applicability of Notification to Establishments

Every employer, other than those belonging to or under the control of the Central Government or a State Government, does not imply that the establishment's appropriate authority is the central government. It only signifies establishments of the government, whether state or central, and those controlled by these governments. Private establishments are not under the control of state or central governments. My question is whether this notification applies to establishments where the appropriate authority is the central government.

Branch Offices Outside Karnataka

In respect of companies having branches outside Karnataka, the appropriate government will obviously be the Central Government, but it need not be an establishment of or controlled by the central government. Moreover, there are companies in Karnataka whose head office or registered office is in other states. Will those branch offices come under this notification?

Please note that this topic is posted here for discussion and awareness among HR professionals. It is not for personal gain that I am raising a query here. The basic purpose of this forum is also sharing knowledge among beneficiaries. Anyone can contribute to this group and participate in the discussion. Therefore, it is expected that knowledge is shared in the open forum itself and not through telephone to a particular person. I hope all would agree with me. If I am wrong, I will withdraw my post.

I agree with your opinion and would like to inform all members that if there is any contract or instrument by which the employer is under the obligation to abide by the Karnataka Government with respect to employee benefits, then the Karnataka Compulsory Gratuity Insurance Rules, 2024, will be applicable to such entities.