Is company obligated to procure insurance under the Karnataka Compulsory Gratuity Insurance Rules of 2024, if only four employees have completed their five year of service, considering insurance companies might not provide coverage for such a small number of employee, posing challenges for MSME?
From India, Bengaluru
From India, Bengaluru
If you have ten employees, your establishment will come under the Payment of Gratuity Act and the rules made thereon. It is immaterial how many of your employees have completed the prescribed five years for entitlement of gratuity. Please understand that gratuity is payable to the dependents of a deceased employee even if the employee has not worked for five years. The same applies to cessation of employment due to permanent total disablement also. Therefore, if you have 10 or more employees, the Act will be applicable to you, and since the Karnataka government has notified section 4A (compulsory insurance of gratuity fund) you have to purchase it.
From India, Kannur
4248From India, Kannur
Hi
" In a significant move to safeguard employee rights and ensure financial security, the Karnataka Government has introduced the Karnataka Compulsory Gratuity Insurance Rules, 2024. Under the new rules, companies can obtain gratuity insurance from the Life Insurance Corporation (LIC) or any other insurance company incorporated under applicable laws. Existing companies must obtain insurance within sixty days (by 10 March 2024), while new employers should secure insurance within thirty days from the date the rules become applicable to their establishment."
https://www.plumhq.com/blog/karnataka-gratuity-insurance-rules-2024-explained#:~:text=Obtaining%20Insurance&text=Exist ing%20companies%20must%20obtain%20insurance,become %20applicable%20to%20their%20establishment.
Section 4A of the Payment of Gratuity Act, 1972 (Gratuity Act) imposes an obligation on employers of establishments with ten or more employees to procure insurance in order to cover their liability of paying gratuity to exiting employees. However, the requirement of procuring such gratuity insurance arises only if the appropriate government (i.e., the state government) makes rules to give effect to the provisions of this section, by way of a notification. Few states in India such as Andhra Pradesh and Telangana have notified compulsory gratuity insurance rules. The government of Karnataka has also joined the said states by notifying the Karnataka Compulsory Gratuity Insurance Rules, 2024 (Gratuity Rules),1 through a notification dated 10 January 2024, which make it mandatory for employers to procure an insurance policy to cover their gratuity liability.
If your Company comes under purview of Gratuity Act then compulsory Gratuity insurance is compulsory irrespective of number of employees completed 5 years. You need to cover all not only who completed 5 years.. Monthly addition/deletion report to be submitted with insurance company. coverage will start from day one of the employee joining.
From India, Madras
" In a significant move to safeguard employee rights and ensure financial security, the Karnataka Government has introduced the Karnataka Compulsory Gratuity Insurance Rules, 2024. Under the new rules, companies can obtain gratuity insurance from the Life Insurance Corporation (LIC) or any other insurance company incorporated under applicable laws. Existing companies must obtain insurance within sixty days (by 10 March 2024), while new employers should secure insurance within thirty days from the date the rules become applicable to their establishment."
https://www.plumhq.com/blog/karnataka-gratuity-insurance-rules-2024-explained#:~:text=Obtaining%20Insurance&text=Exist ing%20companies%20must%20obtain%20insurance,become %20applicable%20to%20their%20establishment.
Section 4A of the Payment of Gratuity Act, 1972 (Gratuity Act) imposes an obligation on employers of establishments with ten or more employees to procure insurance in order to cover their liability of paying gratuity to exiting employees. However, the requirement of procuring such gratuity insurance arises only if the appropriate government (i.e., the state government) makes rules to give effect to the provisions of this section, by way of a notification. Few states in India such as Andhra Pradesh and Telangana have notified compulsory gratuity insurance rules. The government of Karnataka has also joined the said states by notifying the Karnataka Compulsory Gratuity Insurance Rules, 2024 (Gratuity Rules),1 through a notification dated 10 January 2024, which make it mandatory for employers to procure an insurance policy to cover their gratuity liability.
If your Company comes under purview of Gratuity Act then compulsory Gratuity insurance is compulsory irrespective of number of employees completed 5 years. You need to cover all not only who completed 5 years.. Monthly addition/deletion report to be submitted with insurance company. coverage will start from day one of the employee joining.
From India, Madras
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AP Compulsory Gratuity Insurance Rule 2011- Notification.pd f