Application of the Act & Definitions - Payment of Gratuity Act(1972), Industrial Laws | Industrial Laws - B Com PDF Download

Application of the Act

The Payment of Gratuity Act, 1972 extends to the whole of India. It shall, however, not extend to the state of Jammuand Kashmir in so far as it relates to plantations or ports.

According to Section 1(3) the Act 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 andestablishments in a State, in which ten or more persons are employed, or were employed, on any day of the precedingtwelve 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, bynotification, specify in this behalf.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 soapplicable falls below ten.

Definitions

1. Appropriate Government

Appropriate Government means—

(i) in relation to an establishment-

(a) belonging to, or under the control of, the Central Government,

(b) having branches in morethan one State,

(c) of a factory belonging to, or under the control of, the Central Government; (d) of a major port,mine, oil field or railway company, the Central Government;

(ii) in any other case, the State Government;

2. Employee

Employee means any person (other than an apprentice) employed on wages, in any establishment, factory, mine,oilfield, plantation, port, railway company or shop to do any skilled, semi-skilled, or unskilled, manual, supervisory,technical or clerical work, whether the terms of such employment are express or implied, and whether or not suchperson is employed in a managerial or administrative capacity, but does not include any such person who holds a postunder the Central Government or a State Government and is governed by any other Act or by any rules providing forpayment of gratuity.

3. Employer

Employer means, in relation to any establishment, factory, mine, oilfield, plantation, port, Railway Company orshop—

(i) belonging to, or under the control of, the Central Government or a State Government a person or authorityappointed by the appropriate Government for the supervision and control of employees, or where no person orauthority has been so appointed, the head of the Ministry or Department concerned,

(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervisionand control of employees or where no person has been so appointed, the chief executive officer of the local authority,

(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of theestablishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrustedto any person, whether called a manager, managing director or by any other name, such person.

4. Factory

Factory has the meaning assigned to it in clause (m) of section 2 of the Factories Act, 1948.

5. Family

Family in relation to an employee, shall be deemed to consist of—

(i) in the case of a male employee, himself, his wife, his children, whether married or unmarried, hisdependent parents and the dependent parents of his wife and the widow and children of his predeceased son,if any,

(ii) in the case of a female employee, herself, her husband, her children, whether married or unmarried, herdependent parents and the dependent parents of her husband and the widow and children of her predeceased son, ifany.Where the personal law of an employee permits the adoption by him of a child, any child lawfully adopted by himshall be deemed to be included in his family. where a child of an employee has been adopted by another person andsuch adoption is, under the personal law of the person making such adoption, lawful, such child shall be deemed to beexcluded from the family of the employee;

 6. Retirement

Retirement means termination of the service of an employee otherwise than on superannuation.

 7. Superannuation

Superannuation, in relation to an employee, means the attainment by the employee of such age as is fixed in thecontract or conditions of service as the age on the attainment of which the employer shall vacate the employment.

8. Wages

Wages means all emoluments which are earned by an employee while on duty or on leave in accordance with the termsand conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance butdoes not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
 

Section 2(b) : Completed year of Service – means Continuous services for one year.

Section 2A : Continuous service. – For the purposes of this Act,—

(1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterruptedservice, including service which may be interrupted on account of sickness, accident, leave, absence from duty withoutleave (not being absence in respect of which an order treating the absence as break in service has been passed inaccordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike ora lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interruptedservice was rendered before or after the commencement of this Act;(2) where an employee (not being an employeeemployed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period ofone year or six months, he shall be deemed to be in continuous service under the employer—

(a) for the sail period of one year, if employee during the period of twelve calendar months preceding the date withreference to which calculation is to be made, has actually worked under the employer for not less than—

(i) one hundred and ninety days, in the case of any employee employed below the ground in a mineor in an establishment which works for less than six days in a week; and

(ii) appropriate Government two hundred and forty days, in any other case;

(b) for the said period of sixmonths, if the employee during the period of six calendar months preceding the date with reference towhich the calculation is to be made^, has actually worked under the employer for not less than-

(i) ninety-five days, in the case of an employees employed below the ground in a mine or in anestablishment which works for less than six days in a week; and

(ii) one hundred and twenty days, in any other case.

For the purpose of clause

(2) the number of days on which an employee has actually worked under an employer shallinclude the days on which.-

(i) he has been laid-off under an agreement or as permitted by standing orders made under the IndustrialEmployment (Standing Orders) Act, 1946 or under the Industrial Disputes Act, 1947 or under any other lawapplicable to the establishment;

(ii) he has been on leave with full wages, earned in the previous year;

(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of hisemployment; and

(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of suchmaternity leave dose not exceed twelve weeks.

(3) Where an employee, employed in a seasonal establishment, is not in continuous service within the meaning ofclause(1), for any period of an year or six, months, he shall be deemed to be in continuous service under the employer forsuch period if he has actually worked for not less than seventy-five per cent. Of the number of days on which theestablishment was in operation during such period.

Section 3 : Controlling authority.

The Appropriate Government may, by notification, appoint any officer to be a controlling authority, who shall beresponsible for the administration of this Act and different authorities may be appointed for different areas.