The Payment of Gratuity Act 1972


Gratuity Act 1972 – It is a genre of various statutes, such as the Minimum Wage Act, Employment and Social Policy, and so on, that is an extension of labor laws and establishes the minimum benefits to be provided to employees. It is a social security law that provides for the welfare of employees working in industries, businesses, and organizations.

The sole purpose of providing gratuity, that is, a monetary award given for services rendered to employees working in factories, oilfields, mines, plantations, railway companies, shops, or other establishments upon superannuation (e.g., old age pension amount), pension plan, withdrawal, fatality, or disablement. Lets read more about The payment of gratuity act.

Gratuity Act 1972

Gratuity Payment – The Payment of Gratuity Act 1972

If an employee has five years of continuous service on his or her superannuation, retirement, resignation, death, or disablement, They can get the gratuity payment.

However, the five years of continuous service are not required if the termination is due to death or disability. But a retired person can get gratuity amount with his pension. Furthermore, the Act provides for the gratuity amount to be calculated at the rate of fifteen days wages based on the rate of wages last drawn by the employee concerned, provided that the amount paid for overtime work is not considered. Gratuity Act 1972.

The Gratuity amount shall not exceed Rs. 10 lakhs.

So an employee has the right to receive a gratuity for services rendered; however,It is right can be limit for two ways.

1. If the termination is the result of a willful omission or negligence that results in the loss, damage, or destruction of the employer’s property.

2.  If the termination is the result of riotous or disorderly behaviour or the commission of an offence, immoral in nature. Gratuity Act 1972.

3.   Gratuity Recovery

4.   If the employer fails to pay the gratuity amount within the prescribed time limit, the controlling authority must issue a certificate to the collector on behalf of the aggrieved party, recover the amount, including the compound interest determined by the central government, and pay it to the person.

These provisions, however, are subject to two conditions:

The controlling authority must provide the employer with a reasonable opportunity to Demonstrate the cause of such an Act. So the payment of gratuity act is great for employees. We must read The Payment of Gratuity Act 1972.

The amount of interest payable should not exceed the amount of gratuity provided for in this Act.

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