forfeiture of gratuity

7/27/2019 Forfeiture of Gratuity

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The Payment

Of Gratuity Act,1972

Presented By:-

Pavithra -19

Sampada -20

Sangeetha -21

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INTRODUCTION Gratuity is a word derived from Latin word

Gratuities which simply means a gift.

In the industrial sector it can be treated as a giftfrom an employer to his employee for the services.

Gratuity is a benefit, which an employee gets at

the time of retirement or when he leaves theestablishment.

In the present context, it means, a sum of moneypaid to an employee at the end of employment.

Gratuity in case of retirement, superannuation or

death helps family to adjust in a new situation inwhich income ceases partially or completely.

Gratuity Schemes, serves as an important tool ofsocial security.

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OBJECT OF THE ACT

To provide for a scheme for a for thepayment of gratuity to employees

engaged in factories, mines, oil fields,plantations, ports, railway companies,shops or other establishments.

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Extension of Gratuity Act, 1972

The Payment of Gratuity Act, 1972 appliesto the whole India except State of Jammu

& Kashmir in so far as it relates to portsand plantations.

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Application of the Gratuity Act Every factory, mine, oilfield, plantation, port and

Railway Company.

Every shop or establishment within the meaning of any

law for the time being in force in relation to shops and

establishment in a State, in which 10 or more persons

are or were employed on any day in the preceding 12

months.

Such other establishments or class of establishment, in

which 10 or more employees are or were employed

on any day in the preceding 12 months, as notified by

CG by way of a notification in the Official Gazette.

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Appropriate governmentmeans:

In relation to an establishment

Belonging to, or under control of Central

Government, Having branches in more than one state,

Of a factory belonging to, or under thecontrol of Central Government,

Of a major port, mine, oilfield or railwaycompany, the Central Government

In any other case, the State Government .

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Completed year of servicemeans:

Continuous service of one year.

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EMPLOYEE meansAny person (other than apprentice) who is

employed for wages, whether the terms of suchemployment are expressed or implied,

in any kind of work, manual or otherwise,

in or in connection with the work of the factory, mine,oilfields, plantation, port, railway companies, shop orother establishments to which this act applies.

Exception Persons employed in state or CentralGovernment and post which is governed by anyother act or by any rules providing for payment ofgratuity.

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EMPLOYER means: "employer" means, in relation to any

establishment, factory, mine, oilfield, plantation,

port, railway company or shop

In case of state or central govt. a person orauthority appointed by the Government for the

supervision and control of employees, or where no

person or authority has been so appointed, the

head of the Ministry or the Department concerned,

In case of any local authority, the personappointed by such authority for the supervision and

control of employees or where no person has been

so appointed, the chief executive office of thelocal authority,

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Continue

in any other case, the person, who, or the authoritywhich, has the ultimate control over the affairs of the

establishment, factory, mine, oilfield, plantation, port,railway company or shop, and where the said affairsare entrusted to any other person, whether called amanager, managing director or by any other name,such person;

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FACTORY

Factory has the meaning assigned to it inclause (m) of sec.2 of Factories act 1942.

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DEFINITION OF FAMILYIn Case of Male

Employee

Himself

His wife

His children whethermarried or unmarried

His dependant parents

The dependant parentsof his wife and the

widow Children of his

predeceased son, if any

In case of FemaleEmployee

Herself

Her husband

Her children whether

married or unmarried

Her dependant parents

The dependant parents

of her husband & thewidow

Children of her

predeceased son, if any

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Retirement

Means termination of service of anemployee otherwise then on

superannuation.

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Superannuation

By Superannuation is meant the act of getting

relived from service on attaining a specified

age which is prefixed, say, 58 years of age.On the other hand, Retirement is also an act

of relieving from service but not necessarily be

due to attaining a prefixed age and shall

include Voluntary Retirement or even

Compulsory Retirement. Thoughsuperannuation is also retirement, the latter

need not be superannuation.

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Wagesmeans all emoluments which are

earned by an employee while on duty

or on leave in accordance with theterms and conditions of hisemployment and which are paid orare payable to him in cash andincludes dearness allowance but does

not include any bonus, commission,house rent allowance, overtime wagesand any other allowance.

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continuous serviceAn employee shall be said to be in continuous service for a period if

he has, for that period, been in uninterrupted service, includingservice which may be interrupted on account of

sickness,

accident,

leave, absence from duty without leave (not being absent in respect of

which an order treating the absence as a break in service hasbeen passed in accordance with the standing orders, rules orregulations governing the employees of the establishment),

lay-off, strike or

a lock-out or

cessation of work not due to any fault of the employee,

whether such uninterrupted or interrupted service was rendered

before or after the commencement of this Act.

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CONTROLLING AUTHORITY

The appropriate Government, may, bynotification, appoint any officer to be a

controlling authority, who shall beresponsible for the administration of thisact and different controlling authoritiesmay be appointed for different areas.

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Payment of Gratuity Gratuity shall be payable to an employee on the

termination of his employment after he has

rendered continuous service for not less than fiveyears, -

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident ordisease : Provided that the completion of continuousservice of five years shall not be necessary where thetermination of the employment of any employee isdue to death or disablement .

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Calculation of Gratuity

Gratuity Amount payable under Payment of Gratuity Actenhanced from Rs.3.5 lakhs to Rs. 10 lakhs

As Per

Payment of Gratuity (Amendment) Act,2010 (No. 15 of

2010), dated 17-5-2010

Section 4 (4) now reads as

The amount of gratuity payable to an employee shall not exceedTen Lakh Rupees

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Forfeiture of Gratuity: [Sec 4 (6)]1. Forfeiture to the extent to the damages/ loss: if the services of an

employee have been terminated for:

i. any act

ii. Willful omission, or

iii. Negligence

Causing any damage or loss to, or destruction of, property belonging to theemployerthere the gratuity shall be forfeited to the extent of the damageor loss so caused.

2. Wholly or partially forfeiture or gratuity: a) where if the services of suchemployee have been terminated for his riotous or disorderly conduct orb) if the services of such employee have been terminated for any actwhich constitutes an offence involving moral turpitude.

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Compulsory Insurance: Employers liability to obtain insurance: The Payment of Gratuity

Act,1987 has prescribed provisions for compulsory insurance for

employees, which introduces employers liability for paymenttowards the gratuity under act from LIC established under LIC of

Indian Act, 1956 or any other prescribed insurance company.

Exemption to the employers from obtaining insurance: The

Appropriate Government may also exempt a) employers who

have already established an approved gratuity fund in respect ofhis employees and who desires to continue such agreement and

b) employers having 500 or ore employees, who establishes and

approved gratuity in the manner prescribed.

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Employer to register his establishment with the controllingauthority: For the purpose of this section, every employer shallwithin a prescribed time get his establishment registered with

the controlling authority in the prescribed manner, and onlythose employers who have taken an insurance as referred aboveor has established an approved gratuity fund shall be registered.

Appropriate government may make rules: To give effect to theprovisions of this section the govt. may make rules provided forthe compensation of Board of Trustees of the approved gratuityfund, and for the re3covery by the controlling authority of the

amout of gratuity payable to employees of LIC or any otherinsurer with whom an insurance has been taken.

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Employers failure to pay premium/contribute to thegratuity fund: if the employer fails to pay premium to

the insurance or to contribute to an approved gratuityfund, he shall be liable to pay them a amount ofgratuity including interest, if any, for delayed payments. To the controlling authority.

Penalty: Its contravention is punishable with a fine uptors 10000/- and in the case of an continuing offence witha further fine which may extend to rs 1000/- per dayupto the duration the offence continues.

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Power to Exempt

The appropriate govt. may, by notification and subject to suchconditions as may be specified in the notification, exempt anyestablishment, factory, mine, oilfield, plantation, port, railwaycompany or shop to which this Act applies from the operation of the

provisions of this Act:

If in the opinion of the govt. the employees in such establishment,factory, mine, oilfield or shop are in receipt of gratuity orpensionary benefits not less favorable than the benefits conferredunder this Act.

If in the opinion of the govt. such employee or class of employeesare, in receipt of gratuity or pensionary benefits not less favorable

than the benefits conferred under this Act. A notification issued under subsection (1) or subsection (2)

may be issued retrospectively a date not earlier than the date ofcommencement of this Act, but no such notification shall be issuedso as to prejudicially, affect the interests of any person.

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Nominations for Gratuity:Normally , the gratuity is paid to the employee by his employer,where his services are terminated due to any reason in hislifetime, but after death of the said employee, the earned gratuity

is to be paid to his successors and to avoid any type ofcomplications, the provision of the nomination by the employeeto get the gratuity, in case of his death is made. The provisionsare as below:

Nomination by the employee after the completion of 1 yearservice

Distribution of gratuity amount Nomination in favor of one or more family members

Nomination by the employee having no family/ subsequentlyacquiring family

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Modification in nomination by the employee

In case of death of nominee

Nomination to be kept by the employer

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Procedurefor nomination:

1. Nomination form to be submitted in duplicate to

the employeer

2. Submission of the form

3. Acceptance of the form beyond the specified time

4. Period for submission of fresh nomination after

acquiring a family

5. Notice of modification of nomination

6. Nomination duly signed by the employee

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Application for the Payment of

Gratuity:

1) An employee who is eligible for payment of gratuity under theAct, or any person authorized, in writing, to act on his behalf,shall apply ordinarily within 30 days from the date of the

gratuity became payableBut if the date of superannuation or retirement of an employee isknown, the employee may apply to the employer before 30 days ofthe date of superannuation or retirement.

2) A nominee of an employee who is eligible for the payment ofgratuity in case of death of the employee, shall apply to theemployer ordinarily within 30 days from the date of gratuity

becomes payable to him.An application on plain paper with relevant particulars shall also beaccepted. The employer may obtain such other particulars as may

be deemed necessary by him

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3) If an employee dies without making a nomination,

his legal heir, who is eligible for the payment of

gratuity , shall apply, ordinarily within one year fromthe date of gratuity became payable to him.

An application even after the prescribed period shall

also be entertained by the employer, if the sufficient

cause for the delay has been mentioned in theapplication. Any dispute in this regard shall be refrred

to the Controlling Authority for his decision.

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Employers Duty Regarding the

Payment:

1. Determination of the amount of gratuity by the employer: assoon as the gratuity becomes payable, the employer shall,whether the application for the payment of gratuity has been

given or not by the employee, determine the amount ofgratuity and give notice in writing to the person to whom thegratuity is payable and also to the controlling officer.

2. Provision of interest on gratuity amount: if the amount ofgratuity payable under sub-section (3) is not paid by theemployer within the period specified i.e 30 days, the employershall pay, from the date on which the gratuity becomes payable

to the date on which it is paid, simple interest at such rate, notexceeding the rate notified by the Central Government fromtime to time for repayment of long term deposits, as the govt.may, may notification specify.

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3. Notice for payment of gratuity:

i. Claim for gratuity found to be admissible

ii. If the claim for gratuity is not found admissible

iii. Issue of notice to the applicant

iv. Claimant is nominee/ legal heir

v. Services of notices on the applicant

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Mode of Payment of Gratuity:

The Gratuity shall be paid either

In cash or

In demand draft Bank cheque to the claimant.

When the nominee or legal heir is a minor

the amount shall be deposited with

SBI or any of its subsidiaries or

any Nationalized Bank

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Disputes

1. Filling of application on the disputerelating to payment of Gratuity

2. Payment of gratuity amount after inquiryand hearing of the parties to thedisputes

3. Payment of the amount, where there is

no dispute

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Procedure for Dealing withApplication for Direction

1. Issue of notice to appear beforecontrolling authority

2. Representation on behalf of theemployer/ claimant before theControlling Authority

3. Employers fail to appear

4. Review of order

5. Record of particular of case

Direction for payment of Gratuity

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Appeals

1. Appeals to an order

2. Modification of an order

3. Admission of appeal on the production

of the certificate of the deposit ofgratuity

Appointments of Inspectors

By notification , the appropriate Government mayappoint as many inspectors, as it deems fit, for thepurpose of the Act.

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Recovery

Application for recovery of gratuity

1. Penalty for avoiding of any payment to

be made

2. Penalty for contravention and default incompliance of any provision

3. Penalty for non-payment of gratuity

payable under the Act

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Exemption of Employer fromLiability

Where an employer is charged with anoffence punishable under this Act,

he can , after giving three days clearnotice of his intention to do so,

bring any other person whom he chargesas the actual offender, before the court

at the time fixed for hearing the charge.

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Cognizance of Offence

No court take cognizance of any offencepunishable under this Act except on the

complaint made by or under the authorityof Appropriate Government.

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Miscellaneous

Power to make rules

Notice of opening, change or closure of

the establishment.

Display of notice

Display of abstract of the act & rules

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Thankyou

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forfeiture of gratuity

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