Is paying gratuity as a monthly component in salary instead of lump sum amount at the end of service a possibility as per the law? What could be the legal implications?
From India, Chandigarh
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From India, Chandigarh
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Gratuity is to be paid at the end of service or retirement, or upon completion of years of service as stipulated by the Payment of Gratuity Act. Why has the idea of monthly payments arisen? Consider a scenario where a person leaves after 2 years of service. In such a case, they are not entitled to gratuity. To grasp the concept of gratuity, it is essential to refer to the original act.
From India, Pune
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3251From India, Pune
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I agree with you. I did read the gratuity act; however, I just wanted to find out the feasibility and consequences of this kind of payout as I am doubtful myself. I wanted to get some advice from this experienced group.
From India, Chandigarh
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From India, Chandigarh
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Gratuity is payable only after the service comes to an end. Paying gratuity every month militates against the very concept of gratuity itself. As far as CTC is concerned, the gratuity component could be factored in, but actual payment is neither helpful legally in discharging the liability nor is it a practice in the industry.
From India, Mumbai
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From India, Mumbai
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Dear friend from Chandigarh,
Provident Fund, Pension, and Gratuity are the triple terminal benefits provided to the working class as measures of social security when they become jobless due to various reasons like old age, ill health, redundancy, resignation, etc. If you critically analyze these concepts, the maturity of benefits is always interlinked with the cessation of the beneficiary's employment beyond a certain age or a certain predetermined number of years of service. Therefore, the idea of periodical payment of Gratuity while the incumbent is still in service, though seemingly fanciful, will certainly fail to achieve the purpose for which it was primarily conceptualized.
From India, Salem
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Provident Fund, Pension, and Gratuity are the triple terminal benefits provided to the working class as measures of social security when they become jobless due to various reasons like old age, ill health, redundancy, resignation, etc. If you critically analyze these concepts, the maturity of benefits is always interlinked with the cessation of the beneficiary's employment beyond a certain age or a certain predetermined number of years of service. Therefore, the idea of periodical payment of Gratuity while the incumbent is still in service, though seemingly fanciful, will certainly fail to achieve the purpose for which it was primarily conceptualized.
From India, Salem
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Mr. Umakanthan. M
Additional Commissioner of Labour (RTD)
Is the Payment of Gratuity Act being revised by the Government? Where the minimum qualifying service for payment of gratuity is being reduced from 5 years to ___ ?!
From India, Pune
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Additional Commissioner of Labour (RTD)
Is the Payment of Gratuity Act being revised by the Government? Where the minimum qualifying service for payment of gratuity is being reduced from 5 years to ___ ?!
From India, Pune
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Talk of reducing period to 3 years is being heard. Nothing official yet about this. Cost of running an industry is increasing.
From India, Pune
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From India, Pune
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Dear Sandeep,
I have no idea about such a proposal. Already, the amendment to the rules under the IESO Act, 1946, has diluted the concept of minimum qualifying service in respect of FTC employment regarding the payment of gratuity to such employees. So, anything may happen, including the scrapping of qualifying service.
From India, Salem
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I have no idea about such a proposal. Already, the amendment to the rules under the IESO Act, 1946, has diluted the concept of minimum qualifying service in respect of FTC employment regarding the payment of gratuity to such employees. So, anything may happen, including the scrapping of qualifying service.
From India, Salem
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Dear Mr. Umakanthan,
Thank you for your valuable inputs.
Could you please provide clarification on the following scenario: In the event of an employee's death, how much would their nominee be eligible for? Scenario 1: if the death occurs after 3.5 years, and Scenario 2: if the death occurs after 6 years.
I have reviewed the Gratuity Act but did not find clear information on whether the nominee's eligibility is based on the tenure served or the maximum gratuity limit of 20 lakhs.
Regards,
Poonam
From India, Chandigarh
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Thank you for your valuable inputs.
Could you please provide clarification on the following scenario: In the event of an employee's death, how much would their nominee be eligible for? Scenario 1: if the death occurs after 3.5 years, and Scenario 2: if the death occurs after 6 years.
I have reviewed the Gratuity Act but did not find clear information on whether the nominee's eligibility is based on the tenure served or the maximum gratuity limit of 20 lakhs.
Regards,
Poonam
From India, Chandigarh
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Section 4 in The Payment of Gratuity Act, 1972
4 Payment of gratuity. —
(1) 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,—
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) 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: 13 [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 nominees or heirs 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.
(2) 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:
A reading of this section gives clear idea of how gratuity is to be worked out
From India, Pune
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4 Payment of gratuity. —
(1) 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,—
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) 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: 13 [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 nominees or heirs 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.
(2) 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:
A reading of this section gives clear idea of how gratuity is to be worked out
From India, Pune
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FORM-F-NOMINATI ON OF GRATUITY.pdf
Gratuity Form I.doc