Dear All, Greetings of the day!!!!!!!!!!!! Can Any body help me out to give detailed idea on gratuity act in simple and easy lenguage I shall be very obliged to you Thanks & Regards
From India, Mumbai
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5From India, Mumbai
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Dear Ajay
Payment of Gratuity Act, 1972 extends to the whole of India.
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.
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:
the formula for calculating gratutity is
last drawn basic+DA*15/26*no.of years.
to eligible for grautity, 5years continous service required & if there is case of 4 years 10 months or 240 days can be cosnidered.
Maximum gratuity can be given upto Rs10 lakh/-exempted
From India, New Delhi
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Payment of Gratuity Act, 1972 extends to the whole of India.
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.
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:
the formula for calculating gratutity is
last drawn basic+DA*15/26*no.of years.
to eligible for grautity, 5years continous service required & if there is case of 4 years 10 months or 240 days can be cosnidered.
Maximum gratuity can be given upto Rs10 lakh/-exempted
From India, New Delhi
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Dear Mr.Ajay, Please find herewith attached detail of gratuity act in simple and easy language...........
From India, Haldwani
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From India, Haldwani
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Dear Mr. Ajay , Good evening Details for gratuity please check attachment Regards Ram Navghare Manager - IR & Admin
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If service of a person in an establishment is 40yrs, whether he will get gratuity for entire 40 years or not?
From India, Cuttack
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From India, Cuttack
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Why not. The eligibility is continuous service of 5 years. The instant case relates to 40 years.Absolutely no issue regards bk mohanty Director Cypress Management Associates
From India, Bhubaneswar
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From India, Bhubaneswar
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Dear Ajay, one small correction in first reply there no need to complete continually five year in death or disablement case. regards, Gautam Patel
From India, Ahmadabad
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From India, Ahmadabad
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Mr. Kuldeep Rawat Can Gratuity act applicable in Gross salary(Basic+HRA+M.A+D.A)? AND what is provision in law.
From India, Delhi
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From India, Delhi
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Dear all,
This post is really helpful to me, but I have the same technical doubt - does the company need to register with any government organization, similar to the way PF is, or is the gratuity amount just paid from the company's account as a retirement payment to eligible persons?
Thanks and regards,
Sangeeta
From India, Bangalore
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This post is really helpful to me, but I have the same technical doubt - does the company need to register with any government organization, similar to the way PF is, or is the gratuity amount just paid from the company's account as a retirement payment to eligible persons?
Thanks and regards,
Sangeeta
From India, Bangalore
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Dear Members,
In reference to Ms. Sangeeta's query, I wish to mention that unlike the PF Act, you don't need to register your establishment under the Payment of Gratuity Act, 1972. But once the Act is applicable to you, you are supposed to inform the Controlling Authority of the Area under Rule 3(1) of the Central or State rules, as the case may be. You are to maintain nomination forms in respect of all the employees. The Controlling Authority is the authority to decide all the disputes relating to the payment of gratuity.
As for the clarification of Sh. Rawat, the wages shall consist of basic plus D.A., as per the last drawn salary. However, allowances like bonus, commission, HRA, overtime, etc., are not to be considered for calculations [Section 2(s)].
Regarding the doubt of Sh. Mohapatra, the number of years of service is immaterial for the purpose of the calculation of gratuity, but the amount of gratuity is limited to Rs. 10 Lakhs, which has been increased from 3.5 lakhs recently.
BS Kalsi
Contributing Member
From India, Mumbai
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In reference to Ms. Sangeeta's query, I wish to mention that unlike the PF Act, you don't need to register your establishment under the Payment of Gratuity Act, 1972. But once the Act is applicable to you, you are supposed to inform the Controlling Authority of the Area under Rule 3(1) of the Central or State rules, as the case may be. You are to maintain nomination forms in respect of all the employees. The Controlling Authority is the authority to decide all the disputes relating to the payment of gratuity.
As for the clarification of Sh. Rawat, the wages shall consist of basic plus D.A., as per the last drawn salary. However, allowances like bonus, commission, HRA, overtime, etc., are not to be considered for calculations [Section 2(s)].
Regarding the doubt of Sh. Mohapatra, the number of years of service is immaterial for the purpose of the calculation of gratuity, but the amount of gratuity is limited to Rs. 10 Lakhs, which has been increased from 3.5 lakhs recently.
BS Kalsi
Contributing Member
From India, Mumbai
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In gratuity, the calculation should be as follows: basic plus DA divided by 26 and then multiplied by the total number of days calculated. For example, if the basic plus DA is $9000, then the salary for gratuity would be $346.15. Gratuity is calculated at 15 days for one year, and if you have completed 10 years of service, it would be equivalent to 150 days. Therefore, the gratuity payable would be $51,923.
From India, Nasik
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From India, Nasik
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Dear skvgmadm,
Thanks for mentioning the formula for the calculations of the amount of gratuity. It is, however, pointed out that the amount of gratuity calculated is incorrect for an employee who has put in ten years of service on a salary of Rs. 9000/- (basic plus DA) per month. The actual amount of gratuity comes to Rs. 51,922.50, or more precisely Rs. 51,923/- and not Rs. 50,923/- as pointed out by you.
BS Kalsi Member since Aug 2011
From India, Mumbai
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Thanks for mentioning the formula for the calculations of the amount of gratuity. It is, however, pointed out that the amount of gratuity calculated is incorrect for an employee who has put in ten years of service on a salary of Rs. 9000/- (basic plus DA) per month. The actual amount of gratuity comes to Rs. 51,922.50, or more precisely Rs. 51,923/- and not Rs. 50,923/- as pointed out by you.
BS Kalsi Member since Aug 2011
From India, Mumbai
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Gratuity is given if one has served continuously for 5 years. In the 4th year, it should be more than 240 days. In case of death or permanent disablement, the 5-year count is not applicable.
For the calculation of gratuity, you need to know the Basic + DA. The CTC figure would not help in calculating gratuity in your case. It is calculated based on 15 days per completed year of service, divided by 26, as 26 working days are considered for a month in gratuity calculation, not 30.
The formula is: Basic + DA * 15 * number of service years / 26
According to the Madras High Court judgment [Mettur Beardshel], it's 4 years and 240 days in the last year that make workers eligible for gratuity, not only 5 full years. The same applies to disabled individuals (partial/permanent) or in case of death.
It also includes the legal strike period, lockout, legal layoff period, not due to the employee's fault. In gratuity, we consider 26 days for 1 month of work, not because a month has 26 working days, but as a calculation standard; in other statutes, 30 days are considered.
If you do not have a gratuity fund with an insurance company, you have to set up your own GP A/C fund. An actuary would assess it yearly, and you need to make provisions for GP in the balance sheet, paying it before yearly closure for filing the IT return.
The fund should be divided into bonds, securities as prescribed by the central authority. The actuary would guide on that, and the fund should be audited with the audit report signed by the GP fund trustee yearly.
Except for any moral turpitude case arising during employment, you cannot forfeit anyone's gratuity. For instance, even in a situation like kidnapping, stealing, or harassing someone outside the premises, if it is not connected to employment, the gratuity must still be paid.
From India, Calcutta
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For the calculation of gratuity, you need to know the Basic + DA. The CTC figure would not help in calculating gratuity in your case. It is calculated based on 15 days per completed year of service, divided by 26, as 26 working days are considered for a month in gratuity calculation, not 30.
The formula is: Basic + DA * 15 * number of service years / 26
According to the Madras High Court judgment [Mettur Beardshel], it's 4 years and 240 days in the last year that make workers eligible for gratuity, not only 5 full years. The same applies to disabled individuals (partial/permanent) or in case of death.
It also includes the legal strike period, lockout, legal layoff period, not due to the employee's fault. In gratuity, we consider 26 days for 1 month of work, not because a month has 26 working days, but as a calculation standard; in other statutes, 30 days are considered.
If you do not have a gratuity fund with an insurance company, you have to set up your own GP A/C fund. An actuary would assess it yearly, and you need to make provisions for GP in the balance sheet, paying it before yearly closure for filing the IT return.
The fund should be divided into bonds, securities as prescribed by the central authority. The actuary would guide on that, and the fund should be audited with the audit report signed by the GP fund trustee yearly.
Except for any moral turpitude case arising during employment, you cannot forfeit anyone's gratuity. For instance, even in a situation like kidnapping, stealing, or harassing someone outside the premises, if it is not connected to employment, the gratuity must still be paid.
From India, Calcutta
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Gratuity Act-Teachers-Ma dhya Pradesh.docx
Payment of Gratuity Act, 1972 & The Rules.ppt