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

Payment of gratuity

(1) Gratuity shall be payable to an employee on the termination of his employment of his employment after he hasrendered continuous service for not than five years,-

(a) on his superannuation, or

(b) on his retirement of resignation, or

(c) on his death or disablement due to accident or disease:

The completion of continuous service of five years shall not be necessary where the termination of the employment ofany employee is due to death or disablement:For the purposes of this section, disablement means such disablementas incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.The amount of Gratuity is payable to the employee himself. In the case ofdeath of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to hisheirs, 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 beprescribed, until such minor attains majority.

(2) Every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to anemployee at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned.In thecase of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for aperiod of three months immediately preceding the termination of his employment, and, for this purpose, the wages paidfor any overtime work shall not be taken into account. Further in the case of an employee who is employed in a seasonalestablishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of sevendays’ wages for each season. In the case of a monthly rated employee, the fifteen days’ wages shall be calculated bydividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, onreduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him duringthat period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award oragreement or contract with the employer.

Forfeiture of Gratuity 

(a) The gratuity of an employee, whose services have been terminated for any act, willful omission or negligencecausing any damage or loss to, or destruction of, property belonging to the employer’ shall be forfeited to the extentof damage or loss so caused;

(b) The gratuity payable to an employee may be wholly or partially forfeited—(i) if the services of such employeehave been terminated for his riotous or disorderly conduct or any other act of violence on his part, or(ii) if theservices of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.