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PAYMENT OF GRATUITY ACT 1970 Applicability ; every factory ,mine, oilfield, plantation port, railway, company, shops, establishment or educational institutions employing 10 or more employees.(Sec.1) Gratuity- means a gift or a present in return of services rendred.


IMPORTANT DEFINITIONS Completed year of service; Continuous service for one year. Services interrupted on account of sickness, accident, leave, absence from duty without leave (except unauthorized leave) lay-off, strike or lockout or cessation of work (not due to fault of the employee, shall be taken into account for calculating continuous service of one year. Sec.2A.

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Continuous service further means; (a) for seasonal establishment, 180 days during preceding 12 months (b) in any other case, 240 days during preceding 12 months Continuous service of 6 months; (a) 95 days for seasonal industry and 120 days in any other case.

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Who are covered under the Act, all the employees of the establishment irrespective of position or amount of wages/salary drawn. Sec.2(e) Entitlement; on completion of 5 years of continuous services except in case of death or disablement. Qualifying period; on rendering 5 years of continuous service if there is a separation due to either termination, resignation or retirement.

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Wages for calculation; @ of 15daya wages for every completed year of service, as if the month comprises of 26 days, based on the last wages drawn. Sec.2(s) Display of notice; at a conspicuous place at the main entrance in English or the language understood by majority of employees of the factory or establishment. Rure-4

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Payment of gratuity; Sec.4 for piece-rated employee;@ 15 days wages for every completed year based on average of 3 months wages. for seasonal employee; @ 7 days wages for every completed year of service. In any other case; @ 15 days wages for every completed year of service. Maximum ceiling limit; Rs.3,50,000. Sec.4(3)

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Nomination; to be obtained by the employer after expiry of one year’s service, in Form-F. Rule-6 Forfeiture of gratuity; on termination of an employee for moral turpitude or riotous or disorderly behavior. SEC.4(6) Can be forfeited wholly or partially for willfully causing loss or destruction of company’s property . Mode of payment ; by cash or, if so desired by Bank draft or cheque.Rule-9

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Application for gratuity ; to apply within 30 days in Form-I when not paid by the employer within 30 days of termination of employment.Sec.7(1),Rure-7. Application to Controlling Authority ; in Form-N, within 90 days of the cause of action, U/S-7(4)b& Rule-10 if the employer doesn't pay.Next appeal within 60 days u/s7(7), to the Appellate Authority. Protection of gratuity; Can’t be attached in execution of any decree or for proposed recovery after retirement. Sec.13


PENALTIES SEC.9 Imprisonment for 6 months or fine up to Rs.10,000 for avoiding to make payment by making false statement or representation. Imprisonment not less than 3 months and up to one year with fine on default in complying with the provisions of the Act.