Applicability Of The Gratuity Act 1972

The Payment of Gratuity Act, 1972 (The Gratuity Act) is relevant to representatives occupied with industrial facilities, mines, oilfields, manors, ports, railroad organizations, shops, or different foundations with at least ten workers.

To be qualified for gratuity under the Gratuity Act, a worker needs to have at any rate five entire tenure period of working. The person should be working with the administration in five years. Aside from this rule, if a representative passes away or is rendered crippled because of any misfortune or disease, in which case gratuity must be paid.

Gratuity is paid when a representative:

  • Person Is qualified for superannuation;
  • Resigns from the organization (after five years);
  • Leaves the organization; (after five years) or
  • Passes away or is rendered debilitated because of mishap or sickness (if a representative passes away, the gratuity will be paid to the worker's candidate)

What If The Company Drop Out Some Workers From The Organization?

If on account of any shop or organization to which the policy applies. The number of representatives diminishes underneath 10. It will keep on being administered by the gratuity act regardless of the number of workers in the organization. Along these lines, no business can escape the obligation under this act by decreasing the number of workers.

Nothing in this demonstration applies to Apprentices and Persons who hold frequent posts under the Central Government or State Government and are dependent upon some other policy or rule other than this policy.

Calculation Of Gratuity According To The Gratuity Act

The gratuity is paid according to 15 days compensation for each finished year of administration or part thereof more than a half year. The wages here means payment last drawn by the worker. The "15 Days Wages" will be determined by dividing the previously drawn wages by 26 and multiplying the outcome with 15.

Example - A person named "Bhusan" is working in a company for the past 20 years. When he retired, his last drawn basic compensation was 40,000. According to the gratuity act the amount payable to him as per the law would be -

Eqaution formed will be like this - 20 * 40,000 / 26 * 15

Which is equal to - RS. 4,61,538

Note - Suppose you have worked for 20 years and six months, then your total gratuity amount will be calculated on 21 years. If you have worked for 20 years and four months, then your gratuity will be calculated in 20 years.

When And To Whom Gratuity Is Payable

An individual qualified for receiving gratuity under this act or any individual approved is required to send a hard copy to his employer, inside 30 Days and Form I, for receiving the gratuity.

Where the date of superannuation or retirement is realized, then such a structure is to be given 30 days before such date.

  • A Nominee will apply for gratuity in Form J inside 30 days of being payable.
  • A legitimate beneficiary may apply in Form H inside 30 Days of being payable.
Payment Of Gratuity Act