dear all,
we are an organisation covered as pvt. ltd company since 2008. we want to start gratuity for employees. as far as i know "gratuity is payable to employees who completes five years of continuous services in organisation". but how to start.
I have gone through the act also. can some one through some light on below points:
1. what is an insurance number referred to? is it an ESIC number or what?
2. what is an establishment of an approved gratuity fund?
do an organisation need to register with any controlling authority for the same. please guide me.
regards,
From India, New Delhi
5we are an organisation covered as pvt. ltd company since 2008. we want to start gratuity for employees. as far as i know "gratuity is payable to employees who completes five years of continuous services in organisation". but how to start.
I have gone through the act also. can some one through some light on below points:
1. what is an insurance number referred to? is it an ESIC number or what?
2. what is an establishment of an approved gratuity fund?
do an organisation need to register with any controlling authority for the same. please guide me.
regards,
From India, New Delhi
Payment of Gratuity Act,1972
* Applicability
1.
Every factory (as defined in Factories Act), mine, oilfield, plantation, port and railway.
2.
Every shop or establishment to which Shops & Establishment Act of a State applies in which 10 or more persons are employed at any time during the year end.
3.
Any establishment employing 10 or more persons as may be notified by the Central Government.
4.
Once Act applies, it continues to apply even if employment strength falls below 10.
* Eligibility
1. Any person employed on wages/salary.
2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years,
3. In case of death or disablement, the gratuity is payable, even if he has not completed 5 years of service.
* Benefits
1. The quantum of gratuity is to be computed at the rate of 15 days wages (7 days wages in case of seasonal establishments) based on rate of wages last drawn by the employee concerned for every completed year of service or a part thereof exceeding 6 months.
2. The total amount of gratuity payable shall not exceed the prescribed limit.
3. In case where higher benefit of gratuity is available under any gratuity scheme of the Co., the employee will be entitled to higher benefit
* Calculation of Gratuity
1. Gratuity = Monthly Salary x 15 days x No. of yrs. of service
26
2. Max. Gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997)
* Penal Provisions
Nonpayment of gratuity payable under the Act is punishable with imprisonment up to 2 years (minimum 6 months) and/or fine up to RS 20,000/-. Other contravention/offenses attract imprisonment up to 1 year and/or fine up to RS 10,000.
Eligibility for Gratuity: Five years of Continuity service. Even though service is 4 yrs 11 months, he / she is not eligible for Gratuity.
Gratuity Formula: Last drawn Basic/26*15 days * No of years service completed
If service is 5 yrs 6 or 7 months, Gratuity should be calculated for 6 yrs.
Hope this would clear your doubts..
From India, Bangalore
* Applicability
1.
Every factory (as defined in Factories Act), mine, oilfield, plantation, port and railway.
2.
Every shop or establishment to which Shops & Establishment Act of a State applies in which 10 or more persons are employed at any time during the year end.
3.
Any establishment employing 10 or more persons as may be notified by the Central Government.
4.
Once Act applies, it continues to apply even if employment strength falls below 10.
* Eligibility
1. Any person employed on wages/salary.
2. At the time of retirement or resignation or on superannuation, an employee should have rendered continuous service of not less than five years,
3. In case of death or disablement, the gratuity is payable, even if he has not completed 5 years of service.
* Benefits
1. The quantum of gratuity is to be computed at the rate of 15 days wages (7 days wages in case of seasonal establishments) based on rate of wages last drawn by the employee concerned for every completed year of service or a part thereof exceeding 6 months.
2. The total amount of gratuity payable shall not exceed the prescribed limit.
3. In case where higher benefit of gratuity is available under any gratuity scheme of the Co., the employee will be entitled to higher benefit
* Calculation of Gratuity
1. Gratuity = Monthly Salary x 15 days x No. of yrs. of service
26
2. Max. Gratuity payable under the Act is Rs. 3,50,000/- (w.e.f. 24-9-1997)
* Penal Provisions
Nonpayment of gratuity payable under the Act is punishable with imprisonment up to 2 years (minimum 6 months) and/or fine up to RS 20,000/-. Other contravention/offenses attract imprisonment up to 1 year and/or fine up to RS 10,000.
Eligibility for Gratuity: Five years of Continuity service. Even though service is 4 yrs 11 months, he / she is not eligible for Gratuity.
Gratuity Formula: Last drawn Basic/26*15 days * No of years service completed
If service is 5 yrs 6 or 7 months, Gratuity should be calculated for 6 yrs.
Hope this would clear your doubts..
From India, Bangalore
Thanks Ajay for providing wonderful explanation.
but I also want to know as an organisation do we need to register anywhere to implement this in org or simply we can pay gratuity when the time come. is there any legal process we need to complete as per the act. I have read in that act:
"For the purpose of effectively implementing the provisions of this section, every employer shall within such time as may be prescribed get his establishment registered with the controlling authority in the prescribed manner and no employer shall be registered under the provisions of this section unless he has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred to in sub-section (2)"
can you explain more on the same.
one more query is :
what if the person has withdrawn different wages in each year then will it be average wages (for complete duration) for calculating gratuity.
Pls help on the same..
I would like to call other seniors in forum to provide their views on the same.
Thanks!
From India, New Delhi
but I also want to know as an organisation do we need to register anywhere to implement this in org or simply we can pay gratuity when the time come. is there any legal process we need to complete as per the act. I have read in that act:
"For the purpose of effectively implementing the provisions of this section, every employer shall within such time as may be prescribed get his establishment registered with the controlling authority in the prescribed manner and no employer shall be registered under the provisions of this section unless he has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred to in sub-section (2)"
can you explain more on the same.
one more query is :
what if the person has withdrawn different wages in each year then will it be average wages (for complete duration) for calculating gratuity.
Pls help on the same..
I would like to call other seniors in forum to provide their views on the same.
Thanks!
From India, New Delhi
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