Dear Sir,
Our company is registered under the Small Scale Industries - Shops & Establishment Act. However, we are not currently providing gratuity or arrears to our employees. Could you please confirm if these benefits are mandatory for us to offer, or if it is at the discretion of the employer to provide them?
Regards,
From India, Mumbai
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Our company is registered under the Small Scale Industries - Shops & Establishment Act. However, we are not currently providing gratuity or arrears to our employees. Could you please confirm if these benefits are mandatory for us to offer, or if it is at the discretion of the employer to provide them?
Regards,
From India, Mumbai
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As per the Payment of Gratuity Act 1972, if your manpower strength is 10 or more, then the act is applicable to your organization. Gratuity should be paid after completing 5 years of service; it is a statutory compliance. If an employee completes 5 years and resigns from the company, they are eligible for gratuity. Payment should be made within 30 days, and if delayed, interest at 12% will apply.
If you have any queries, feel free to call or email me.
From India, Kolkata
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47If you have any queries, feel free to call or email me.
From India, Kolkata
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And see section 4 of the Payment of Gratuity Act, 1972.
Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
- on his superannuation, or
- on his retirement or resignation, or
- on his death or disablement due to accident or disease:
Provided that 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:
Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.
Explanation: For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:
Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:
Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.
Explanation: In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.
The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.
For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.
Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
Notwithstanding anything contained in subsection (1):
- the gratuity of an employee, whose services have been terminated for any act, willful 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, or if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
From India, Kolkata
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Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
- on his superannuation, or
- on his retirement or resignation, or
- on his death or disablement due to accident or disease:
Provided that 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:
Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.
Explanation: For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:
Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:
Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.
Explanation: In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.
The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.
For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.
Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
Notwithstanding anything contained in subsection (1):
- the gratuity of an employee, whose services have been terminated for any act, willful 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, or if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
From India, Kolkata
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Hi Deepti,
Greetings of the day!
Firstly, you do not need to pay gratuity until you have completed six years with your organization. You are not entitled to pay gratuity unless you have more than 10 employees who have been working for more than 4 years. Additionally, the gratuity limit is 10 lakhs.
From India, Mumbai
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Greetings of the day!
Firstly, you do not need to pay gratuity until you have completed six years with your organization. You are not entitled to pay gratuity unless you have more than 10 employees who have been working for more than 4 years. Additionally, the gratuity limit is 10 lakhs.
From India, Mumbai
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