The Payment of Gratuity Act of 1972 establishes rules for the payment of gratuities to employees in India. The act applies to factories, mines, oilfields, plantations, ports, and railway companies with 10 or more employees. It requires that gratuity be paid to employees who have worked continuously for at least 5 years upon superannuation, retirement, resignation, or death. Gratuity is calculated based on last wages and years of service. The act defines employees and wages and outlines when gratuity can be withheld. It also addresses nominations, determinations, penalties, and exemption powers. Various forms are provided to facilitate nominations and applications related to gratuity.

1. THE PAYMENT OF
GRATUITY ACT,1972
By
Venkatesh K

2. Extent and Application
• It extends to the whole of India
Applicable to:
• every factory, mine, oilfield, plantation, port and railway
company
• every shop or establishment in which 10 or more persons are
employed, or were employed, on any day of the preceding twelve
months

3. Definitions
• "employee" means any person employed to do any skilled, semi-
skilled, or unskilled, manual, supervisory, technical or clerical
work.
• it does not include an apprentice
• "wages" includes dearness allowance but does not include any
bonus, commission, house rent, allowance, overtime wages and
any other allowance.

4. Gratuity when payable ?
Gratuity shall be payable to an employee:
• Who has rendered continuous service for not less than 05 years on the
termination of his employment
• on his superannuation
• on his retirement
• resignation
• on his death or disablement due to accident or disease
Note:
• The completion of continuous service of five years shall not be necessary where
the termination of the employment of any employee is due to death or
disablement

5. How to calculate the Amount of Gratuity
Monthly rated employee :
• At the rate of 15 days wages based on the rate of wages last drawn by the employee
concerned.
Formula
• last drawn wages X 15 days X No. of completed year of service
26(No. of Days in a month)
Piece-rated employee, daily wages :
• On the average of the total wages received by him for a period of three months
immediately preceding the termination of his employment excluding overtime wages
Seasonal establishment :
• At the rate of seven days wages for each season.
• Maximum Limit Rs.3,50,000/-
• Higher benefits can be paid if the employer so desires.

6. Can Gratuity be withheld by the employer ?
• The gratuity of an employee, whose services have been terminated
for any act, wilful omission or negligence causing any damage or loss
to, or destruction of, property belonging to the employer, shall be
forfeited to the extent of the damage or loss so caused.
• The gratuity payable to an employee may be wholly or partially
forfeited.
• If the services of such employee have been terminated for his riotous
or disorderly conduct or any other act of violence on his part.
• If the services of such employee have been terminated for any act
which constitutes an offence involving moral turpitude, provided that
such offence is committed by him in the course ofhis employment.

7. Power to exempt
The appropriate Government
• State Government
• Central Government
• may (as the case may be) exempt any establishment, factory, mine,
oilfield, plantation, port, railway company or shop from the
application of this Act by notification.

8. Nomination
• Each employee, who has completed one year of service, shall make
nomination for to receive the amount of gratuity.
• In his nomination, an employee may, distribute the amount of gratuity
payable to him amongst more than one nominee.
• If at the time of making nomination he has already family, he can not make
nomination in favour of a person who is not a member of his family. If he
does so it shall be void.
• Fresh nomination in favour of one or more members of his family is
required where he has not family at the time of making nomination.
• If a nominee predeceases the employee, the interest of the nominee shall
revert to the employee who can make a fresh nomination.
• Every nomination, fresh nomination or alteration of nomination, as the case
may be, shall be sent by the employee to his employer, who shall keep the
same in his safe custody.

9. Determination of the amount of gratuity
A person who is eligible for payment of gratuity shall send a written
application to the employer.
• The employer shall determine the amount of gratuity and give
notice in writing to the person to whom the gratuity is payable
and also to the controlling authority specifying the amount
gratuity so determined as soon as gratuity becomes payable and
whether or not an application has been made by the concerned
employee.
• The employer shall arrange to pay the amount of gratuity within
30 days from the date it becomes payable.

10. Penalties
Knowingly making false statement/ false representation to avoid to make
payment :
• Imprisonment up to 06 months, or with fine which may extend to
Rs.10,000/- or with both.
Breach, or makes default in complying with any of the provisions of this
Act :
• Imprisonment for 03 months to 01 year, or with fine which shall not be
less than Rs.10,000/- but which may extend to Rs.20,000/- or with both
Non-payment of any gratuity :
• Imprisonment 6 months to 02 years + a fine.

11. Gratuity Forms & Uses

12. FORM ‘A’
Notice of Opening :
• This form is mainly used for Registering the Establishment/Factory
with Gratuity Act.
• In this form the employer has to fill all the necessary details about
the concern Establishment/Factory.

13. FORM ‘B’
Notice of Change
• This form is mainly used for Updating any changes which are been
Registered in Form ‘A’.
• In this form the employer Update the changes which have been made in
the Establishment/Factory.
Example:
1. Name.
2. Address.
3. Name of the employer.
4. Nature of business.

14. FORM ‘C’
Notice of Closure
• This form is mainly used for Closing down Establishment/Factory by Employer.
• In this form employer needs to fill the entire details about the
Establishment/Factory like
1. Name and address of the establishment.
2. Name and address of the Head Office, if any.
3. Name and designation of the employer.
4. Number of persons in employment.
5. Number of employees entitled to Gratuity.
6. Amount of Gratuity involved.

15. FORM ‘D'
Notice for excluding husband from family
• This form is mainly used for excluding husband from family by a
Female Employee
• In case of any personal issues, this form is helpful for Female
employees to deal it in a legal way.

16. FORM ‘E’
Notice of withdrawal of notice for excluding husband from family
• It is used for withdrawal of notice excluding husband from family
by a Female Employee
• In case of any personal issues, this form is helpful for Female
employees to deal it in a legal way.

17. FORM ‘F'
Nomination
• It is used for nominating concern person to get gratuity in case of
any sudden situation which might happen to that employee
• It gives assured benefit for employee in any circumstances about
Gratuity

18. FORM ‘G’
Fresh Nomination
• It is used for nominating Fresh person instead of old nominee to
get gratuity in case of any sudden situation which might happen to
the employee
• It gives assured benefit for employee in any circumstances about
Gratuity

19. FORM ‘H’
Modification or nomination
• It is used for modify nominee name in order to get gratuity in case
of any sudden situation which might happen to the employee
• It gives assured benefit for employee in any circumstances about
Gratuity

20. FORM ‘I’
Application of gratuity by an employee
• It is used for registering the gratuity act for employee
• It should be filled by the concern employee for their gratuity eligible purpose.
Statement
1. Name in full.
2. Address in full
3. Department/Branch/Section where last employed.
4. Post held with Ticket No. or Serial No., if any.
5. Date of appointment.
6. Date cause of termination of service.
7. Total period of service.
8. Amount of wages last claimed.
9. Amount of gratuity claimend.

21. FORM ‘J'
Application for gratuity by a nominee
• It is used for nominee to fill it for Gratuity benefits in case of the
employee dies, who worked in that Establishment
• It gives assured benefit for Nominee to get Gratuity benefits in
any circumstances legally.

22. FORM ‘K’
Application for gratuity by a legal heir
• It is used by legal heir to claim the Gratuity benefits in case the
Employee who worked in that establishment died suddenly
without nominating any one for Gratuity benefits.
• It gives assured benefit for legal heir to get Gratuity benefits in
any circumstances legally.

23. FORM ‘L'
Notice for payment of gratuity
• It is used by Employer to send notice for payment of gratuity for
the employee who might be applied for the benefits of Gratuity.
• In this for it will give entire database about the employee with
years of service for the Establishment and total monetary
benefits.

24. FORM ‘M’
Notice rejecting claim for payment of gratuity
• It is sent by employer to concern employee/legal heir, if the
concern person applied for claim of gratuity.
• If the claim made by employee found illegal this form can be used
by Employer to make a notice for rejecting the claim for payment
of gratuity

25. FORM ‘N’
Application for direction
• It is used by employee to concern employer/legal heir, if the
concern person or legal heir is rejecting or failing to provide
Gratuity benefits to the Applicant.
• It helps the employee to make a claim on employer for rejecting
gratuity benefits in legal measures.

26. FORM ‘O’
Notice for appearance before the controlling authority
• It is used by The Controlling Authority of Gratuity act, when an
employee files a case against the concern employer/legal heir, if
the concern person or legal heir is rejecting or failing to provide
Gratuity benefits to the Applicant.
• It helps the employee to make a claim on employer for rejecting
gratuity benefits in legal measures.

27. FORM ‘P’
Summons
• It is used to give summon for the Employer by The Controlling
Authority of Gratuity act, when an employee files a case against
the concern employer/legal heir, if the concern person or legal
heir is rejecting or failing to provide Gratuity benefits to the
Applicant.
• It leads to summon the concern Employer to appear personally
before this Authority.

28. FORM ‘Q’
Particulars of application under section 7
• It is used as proof between the claims which occurred in front of
Controlling authorities between Employee and Employer on
Gratuity Benefits.
• In this form everything happened between the two parties will be
registered legally.

29. FORM ‘R’
Notice for payment of Gratuity
• It is used as a Notice by Controlling authorities to concern
Employer on Gratuity Benefits that should be awarded to the
Concern Employee.
• It is an official notice given by Controlling Authorities to Employer.

30. FORM ‘S’
Notice for Payment of Gratuity as determined by Appellate
Authority
• It is used as a Notice by Appellate authorities to concern Employer
on Gratuity Benefits that should be awarded to the concern
Employee.
• It is an official notice given by Appellate Authorities to Employer
to pay the disputes Immediately under their Knowledge.

31. FORM ‘T’
Application for recovery of gratuity
• It is used as a Legal Notice by Controlling authorities to concern
Employer on Gratuity Benefits that should be awarded to the
concern Employee within specific period of time.

32. Thank You