Could someone please inform me if our company still has to follow gratuity rules? We have been registered under the Shops and Establishment Act since 2007 and have just completed 5 years in 2012. When we started, we had only 7 employees. Gradually, we grew to 35, but now we have reduced back to 9 employees. Do we still have to follow gratuity rules?
Thanks and regards,
Djo
From India, Ahmedabad
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2Thanks and regards,
Djo
From India, Ahmedabad
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Hi Daisy All the organisaitons are covered under gratuity act. But applicability of the Gratuity is for the employees who are completed 5 years of conitnious employment in the same organisation.
From India, Bangalore
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From India, Bangalore
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Dear Satish/Jeevarathnam, Thanks for your quick response. Do our company still have to follow the gratuity rules, when we have now reduced to only 9 employees? thanks and regards daisy
From India, Ahmedabad
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From India, Ahmedabad
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Yes it is being followed not only our company but every company which comes under it. Satish
From India, New Delhi
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From India, New Delhi
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no no you are not eligible because you are not covered under factory act as you are 9 employees you are not eligible for Gratuity. satish
From India, New Delhi
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From India, New Delhi
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This is to amend what has been communicated to you by our members. Your company is eligible for the Payment of Gratuity Act. However, you are required to pay gratuity only if the employee has completed five years of continuous service in your organization.
I hope this clarifies your query.
Regards.
From India, Visakhapatnam
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I hope this clarifies your query.
Regards.
From India, Visakhapatnam
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Thank you very much for your valued inputs. I have understood that I need to disburse gratuity to those who complete continuous 5+ years of employment in our organization.
I need one more clarification - if an employee has worked for 4 years and 5 months, can he demand gratuity? Out of the 5 months, 2 months are the notice period.
Thanks and regards,
Daisy
From India, Ahmedabad
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I need one more clarification - if an employee has worked for 4 years and 5 months, can he demand gratuity? Out of the 5 months, 2 months are the notice period.
Thanks and regards,
Daisy
From India, Ahmedabad
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Company policy is not allowing me to proceed. Even though I am in favor of paying, we need to consider precedent as well. Once we implement this for 4.5 years, others might start demanding the same.
Government Policy Inquiry
Is there any policy from the government that I can show the management?
Thanks and regards,
Daisy
From India, Ahmedabad
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Government Policy Inquiry
Is there any policy from the government that I can show the management?
Thanks and regards,
Daisy
From India, Ahmedabad
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The date of completion of 5 years shall be taken from the joining date of the employee until the last date of leaving. The 240 days are counted only for the continuance of service of an employee. Certainly, only a person who has completed 4 years and 240 days of service is thereby eligible for gratuity. In the case specified by you, the employee is not eligible.
P.S: Gratuity is paid only if the employee's date of leaving has completed 5 years.
Regards.
From India, Visakhapatnam
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P.S: Gratuity is paid only if the employee's date of leaving has completed 5 years.
Regards.
From India, Visakhapatnam
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Dear Sharmila, Is it compulsory for all employee claiming gratuity to fill form I? Do we have to file the form I in any government department? thanks and regards daisy
From India, Ahmedabad
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From India, Ahmedabad
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Dear Ms. Daisy,
Applicability of the Payment of Gratuity Act
Please read Section 1(3)(c) of the Payment of Gratuity Act. According to this subsection, if any shop or establishment to which any law relating to shops and establishments is applicable employs ten or more persons, then the Payment of Gratuity Act is applicable. As your shop/establishment has employed more than 10 persons at some point in time, the Payment of Gratuity Act is applicable to your establishment.
Please also read Section 1(3A) of the Payment of Gratuity Act. This section states that in the case of a shop or establishment which had employed 10 or more persons and in which the number of employees falls below ten at some point, the Payment of Gratuity Act will continue to apply even though the number of employees has become less than ten. This covers the applicability of the Payment of Gratuity Act to your establishment/shop.
For an individual employee to claim the benefit of the Payment of Gratuity Act, this Act should be applicable to the establishment, and the individual employee should satisfy the conditions specified in the PG Act to become eligible to receive gratuity.
With regards,
From India, Madras
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Applicability of the Payment of Gratuity Act
Please read Section 1(3)(c) of the Payment of Gratuity Act. According to this subsection, if any shop or establishment to which any law relating to shops and establishments is applicable employs ten or more persons, then the Payment of Gratuity Act is applicable. As your shop/establishment has employed more than 10 persons at some point in time, the Payment of Gratuity Act is applicable to your establishment.
Please also read Section 1(3A) of the Payment of Gratuity Act. This section states that in the case of a shop or establishment which had employed 10 or more persons and in which the number of employees falls below ten at some point, the Payment of Gratuity Act will continue to apply even though the number of employees has become less than ten. This covers the applicability of the Payment of Gratuity Act to your establishment/shop.
For an individual employee to claim the benefit of the Payment of Gratuity Act, this Act should be applicable to the establishment, and the individual employee should satisfy the conditions specified in the PG Act to become eligible to receive gratuity.
With regards,
From India, Madras
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Payment of Gratuity Act, 1972
As per the provisions of the Payment of Gratuity (PG) Act, 1972, any establishment that employs 10 or more workmen shall be covered under the Act.
Regarding the workmen, the liability to pay gratuity arises when they leave the job either voluntarily (resignation) after completing 5 years or upon superannuation (at the age of retirement, typically 60 or above). Even after the Act covers the establishment, if the number of workmen reduces below 10, the Act shall continue to apply.
From India, Chennai
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As per the provisions of the Payment of Gratuity (PG) Act, 1972, any establishment that employs 10 or more workmen shall be covered under the Act.
Regarding the workmen, the liability to pay gratuity arises when they leave the job either voluntarily (resignation) after completing 5 years or upon superannuation (at the age of retirement, typically 60 or above). Even after the Act covers the establishment, if the number of workmen reduces below 10, the Act shall continue to apply.
From India, Chennai
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As per the Gratuity Act, if the employee strength is more than 10 in any year, then gratuity is applicable. Gratuity is given to those employees who are in continuous service for 4 years plus 280 days of the fifth year.
Thanks,
Narendar Paleti
From India, Hyderabad
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Thanks,
Narendar Paleti
From India, Hyderabad
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Gratuity Act Applicability
The Gratuity Act applies to an establishment from the moment it has 10 employed persons. Even if the number of employed persons falls below 10, the Act will continue to apply.
Regards,
Varghese Mathew
From India, Thiruvananthapuram
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The Gratuity Act applies to an establishment from the moment it has 10 employed persons. Even if the number of employed persons falls below 10, the Act will continue to apply.
Regards,
Varghese Mathew
From India, Thiruvananthapuram
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Dear all, there is no needs of Nos but as per gratuity act one should have to complete continue five years of service than he will be entitled for gratuity. Rajvir
From India, Delhi
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From India, Delhi
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Applicability of the Gratuity Act
It is applicable to all shops or establishments where 10 or more employees are employed on any day of the preceding twelve months. It shall continue to be covered even if at a later date the number of employees is reduced. The Gratuity Act has a wide application; the only condition is having 10 or more employees.
From India, Bokaro
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It is applicable to all shops or establishments where 10 or more employees are employed on any day of the preceding twelve months. It shall continue to be covered even if at a later date the number of employees is reduced. The Gratuity Act has a wide application; the only condition is having 10 or more employees.
From India, Bokaro
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dear daisy, if one employee who has completed 5years of continous service alongwith 6months den dat 6months calculate as 1year...u calculate gratuity with no. of services of 6years regards gayatri
From India, Halisahar
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From India, Halisahar
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The employee needs to fill form I You have to fill form J whengiving his gratuity None of them needs to be given to the government. Keep it for your own records.
From India, Mumbai
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From India, Mumbai
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If you go through the definitions about the applicability, in my opinion, gratuity is applicable in your case even if the number is less than 10 today, subject to the completion of 5 years of service by the individual. Look at the definitions:
An Act to Provide for a Scheme for the Payment of Gratuity
An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops, or other establishments and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:
Section 1: Short Title, Extent, Application, and Commencement
(1) This Act may be called the Payment of Gratuity Act, 1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir.
(3) It shall apply to:
(a) every factory, mine, oilfield, plantation, port, and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
(3A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.
(4) It shall come into force on such date as the Central Government may, by notification, appoint.
Section 3(b) clearly says "ten or more persons are employed or were employed." It is better to make the 5-year completed employees eligible to avoid further legal consequences.
Regards,
Ulhas Chandratre
Sr. HR Professional, Pune
From India, Pune
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An Act to Provide for a Scheme for the Payment of Gratuity
An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops, or other establishments and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:
Section 1: Short Title, Extent, Application, and Commencement
(1) This Act may be called the Payment of Gratuity Act, 1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir.
(3) It shall apply to:
(a) every factory, mine, oilfield, plantation, port, and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
(3A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.
(4) It shall come into force on such date as the Central Government may, by notification, appoint.
Section 3(b) clearly says "ten or more persons are employed or were employed." It is better to make the 5-year completed employees eligible to avoid further legal consequences.
Regards,
Ulhas Chandratre
Sr. HR Professional, Pune
From India, Pune
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Applicability of the Payment of Gratuity Act
The Payment of Gratuity Act is applicable to all employees working in factories, oil fields, mines, plantations, ports, railway companies, and every shop & establishment employing 10 or more persons on any day of the preceding 12 months. It further stipulates that once a shop or establishment comes under the purview of this Act, it shall remain within the ambit of this Act even if the number of employees falls below 10. However, the Central Government can exempt any establishment from the applicability of this Act.
Eligibility for Gratuity
In order to become eligible to receive gratuity, the concerned employee has to fulfill the requirement of "continuous service" as defined in the Act. Furthermore, it is payable only under the circumstances specified in the Act and not otherwise, for example, in the case of retirement, superannuation, resignation, death, etc.
Non-payment of gratuity is a serious offense and may lead to the payment of additional penal interest along with other consequences. Therefore, please take actions in accordance with the provisions of the Act mentioned above.
From India, Delhi
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The Payment of Gratuity Act is applicable to all employees working in factories, oil fields, mines, plantations, ports, railway companies, and every shop & establishment employing 10 or more persons on any day of the preceding 12 months. It further stipulates that once a shop or establishment comes under the purview of this Act, it shall remain within the ambit of this Act even if the number of employees falls below 10. However, the Central Government can exempt any establishment from the applicability of this Act.
Eligibility for Gratuity
In order to become eligible to receive gratuity, the concerned employee has to fulfill the requirement of "continuous service" as defined in the Act. Furthermore, it is payable only under the circumstances specified in the Act and not otherwise, for example, in the case of retirement, superannuation, resignation, death, etc.
Non-payment of gratuity is a serious offense and may lead to the payment of additional penal interest along with other consequences. Therefore, please take actions in accordance with the provisions of the Act mentioned above.
From India, Delhi
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Applicability of the Payment for Gratuity Act
Please understand that the Payment for Gratuity Act is applicable to the following organizations:
1. Every factory (as defined in the Factories Act), mines, oil fields, railways, ports, etc.
2. Every shop or establishment (as defined in the Shop Establishment Act of a state) where 10 or more employees are employed on any day during the year.
3. Every establishment employing 10 or more persons.
4. Once the Gratuity Act applies to any establishment, it will continue to apply even if the employee strength falls short of 10 employees.
In view of the above, your organization still has to follow the Gratuity Act even if your total strength has become 9. Therefore, you must continue to make contributions towards gratuity for all those employees who have completed 5 years of continuous service with your organization.
For any queries, please revert back.
Thanks & regards,
Suman Yadav
From India, Delhi
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Please understand that the Payment for Gratuity Act is applicable to the following organizations:
1. Every factory (as defined in the Factories Act), mines, oil fields, railways, ports, etc.
2. Every shop or establishment (as defined in the Shop Establishment Act of a state) where 10 or more employees are employed on any day during the year.
3. Every establishment employing 10 or more persons.
4. Once the Gratuity Act applies to any establishment, it will continue to apply even if the employee strength falls short of 10 employees.
In view of the above, your organization still has to follow the Gratuity Act even if your total strength has become 9. Therefore, you must continue to make contributions towards gratuity for all those employees who have completed 5 years of continuous service with your organization.
For any queries, please revert back.
Thanks & regards,
Suman Yadav
From India, Delhi
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Coverage Under the Payment of Gratuity Act
All factories, mines, plantations, oil fields, railway companies, ports, and shops & establishments in which 10 or more persons are employed are covered by the Payment of Gratuity Act. Once a shop or establishment comes under the purview of the Payment of Gratuity Act, it shall continue to be within the ambit of this Act even if the number of employees falls below 10.
From India, Delhi
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All factories, mines, plantations, oil fields, railway companies, ports, and shops & establishments in which 10 or more persons are employed are covered by the Payment of Gratuity Act. Once a shop or establishment comes under the purview of the Payment of Gratuity Act, it shall continue to be within the ambit of this Act even if the number of employees falls below 10.
From India, Delhi
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