THE TOPIC IS RELATED TO Payment of gratuity act 1972 WHICH IS VERY IMPORTANT I HOPE THIS WILL HELP YOU THANK YOU

1. PAYMENT OF GRATUITY ACT
,1972
PRESENTED BY
NAVEEN S

2. WHAT IS GRATUITY ?
Gratuity is a sum of money paid by an employer to its employee at the end of the
period of his/her employment as a mark of recognition for contributing to the
company.
In other words, it is one of the retirement benefits offered by an employer to an
employee upon Retirement / leaving a job.
For Government employees , whole amount of gratuity is exempted while for others
exemption is as per section10(10) of Income Tax Act,1961.

3. APPLICATION OF THE ACT
• It depends on two factors:
• First, he should be employed in the establishment in which the act applies according
to sec.1(3):
• Every factory, Mine, oilfield, plantation, port and railway company; - Every industry
or establishment within the meaning of law, in relation of shops and establishment of
state, in which 10 or more people employed or were employed or people on any day
of preceding 12 months;
• As per the notification of central govt. in this behalf.

4. SECONDLY HE SHOULD BE EMPLOYEE AS
PER SEC 2(E)
• Employees means any person (other than apprentice) employed on wages on the
establishment to do any skilled, semiskilled, unskilled, manual or supervisory,
technical or clerical work. And now with new amendment, the definition has been
broad based as to include any person, employed to do any kind of work.Thus the
definition includes a teacher as an employee under the Act.

5. WHEN IS GRATUITY PAYABLE
• According to sec. 4(1) of this act, Gratuity is paid to employees after rendering
continuous service of 5 years:
- on his superannuation;
- on his retirement or termination;
- on his death or disablement due to accident or disease.

6. CONTINUE SERVICE MEAN
• Section 2(a) of The Payment of Gratuity Act defines as:
• A workman shall be said to be in continuous service for a period if he is, for that
period, in uninterrupted service, including service which may be interrupted on
account of sickness or authorized leave or an accident or a strike, which is not
illegal, or a lock-out or on account of non-employment or discharge of such
workman for a period which does not exceed three months and during which period
a substitute has been employed in his place by the employer, or a cessation of work
which is not due to any fault on the part of the workman.
• This means it includes all approved leaves, legal strike, weekly off everything. It
does not mean that you have to be present in the office for whole 365 days in a year.

7. IF AN EMPLOYEE HAS COMPLETED 4 YEARS
AND 240 DAY IS HE ELIGIBLE FOR GRATUITY ?
• Madras High Court judgment in the case of Mettur Beardsell Ltd.V/s Regional Labor
Commissioner (central) Madras and Others. In this judgment, the Madras High Court declared
that if an employee has completed 4 years 10 months and 18 days service without break i.e. 240
days, it should be considered as completed 5 years under section 2(a), 2(b), 2(c) and 2(e) of the
Payment of Gratuity Act.
• Even honorable Supreme Court of India had given similar judgment. by virtue of the judgment of
Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar
Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has
a service of 240 days in the preceding 12 months and it is not necessary that he should have
completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act
and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also
and hence an employee rendering service of 4 year 10 months 18 days is considered to have
completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."

8. TO WHOM GRATUITY IS PAYABLE
• normally to employees
• in case of death to his nominees
• in case of no nomination has made, or been made is minor , then controlling authority
will deposit this money in the bank account for the benefits of minor nominee/
nominees.

9. AMOUNT OF GRATUITY PAYABLE
monthly salary x 15 days x no. of years of service completed
Gratuity = 26
• Maximum salary payable under the gratuity act is Rs. 10,00,000/- sec.4(3).
• Mode of payment of gratuity:
• in cash or - demand draft or
• bank cheque
• payment by postal money order if amount is less than Rs. 1000/- if employee desires.

10. COMPLIANCE FOR THE COMPANY
1.As soon as the Gratuity Act become applicable, you should inform to the controlling authority i.e. to The
Labor Commissioner office under whose jurisdiction your office falls in Form A.
2. Any changes in company's particular:The Employer must submit a Notice in Form ‘B’ to the Controlling
Authority i.e. to labor commissioner of the area within 30 days of any change in the name, address, employer
or nature of business. Employer means Directors of the company.
3. Display of extract of the rules/ Act: you must display extract of the Act near the main entrance of the
company. I know it is difficult for a modern organization specially MNC, please make it available on intranet
site, so employee can access it. It should be in English and in local language understood by majority of the
employee .
4. Notice of closure of establishment: Even if you wish to close your organization, a notice under form C must
be given to the controlling authority i.e. assistant commissioner of labor/ commissioner of labor’s office.
Basically, this provision is made for safeguarding employees and to ensure all those who are eligible for
Gratuity gets their amount before closure of the company.

11. CONT..
5. Nomination: Please ensure that your all employees have given Nomination under
payment of Gratuity Act. If not, circulate nomination form to all employees, ask them to
fill it and submit it. Give them one copy back. It is very essential. It is also mandatory to
keep all the nomination form in safe custody. Please keep them in employee's HR file or
any other place from where it can be produced as and when required. Form F.
6. Informing employee and controlling authority about gratuity amount payable: As and
when Gratuity amount is payable, the calculation should be shown to employee as well
as to The Controlling Authority

12. PROCEDURE TO GET GRATUITY
• Submit Application in form I by employee or Application in form J by nominee (If
employee is not alive) or Application in form K by legal heir (if employee is not alive).
• Submit the application to the employer within 30 days from the date of it becomes
payable.The employer shall pay the gratuity within 30 days from the receipt of the
application. For belated payment the employer is liable to pay 10% simple interest
also.

13. RIGHTS AND OBLIGATIONS OF EMPLOYEE
• Application for payment of gratuity:
• Section 7(1): person eligible to gratuity, to act on his behalf shall send a written
application on this behalf.
• Rule 7: the payment of gratuity rules, 1972 provides that the application shall be
ordinarily made within 30days from the date of gratuity becomes payable.
• In case of superannuation or retirement of employee is known, the employee may
apply before 30 days of superannuation or retirement.
• Rule 7(2): A nominee of employee is eligible for gratuity in case death of employee
shall apply within 30 days from the date it becomes payable to him.

14. FORM,
UTILIZATION
Form Description
FORM A Notice of Opening
FORM B Notice of Change
FORM C Notice of Closure
FORM D Notice for excluding husband from family
FORM E Notice of withdrawal of notice for excluding
husband from family
FORM F Nomination
FORM G Fresh Nomination

15. FORM DESCRIPTION
FORM H Modification Of Nomination
FORM I Application for gratuity by an employee
FORM J Application for gratuity by a nominee
FORM K Application for gratuity by a legal heir
FORM L Notice for payment of gratuity
FORM M Notice rejecting payment of gratuity
FORM N Application for direction

16. FORM DESCRIPTION
FORM O Notice for appearance before the controlling
authority
FORM P Summons
FORM Q Particulars of application under Section 7
FORM R Notice for payment of Gratuity
FORM S Notice for payment of Gratuity as determined
by appellate authority
FORM T Application for recovery of gratuity
FORM U Display of abstract of the act and rules