Payment of Gratuity Act, 1972

Concept of Social Security

A protection for self and / or dependants against LOSS OF

INCOME and UNDESIRED WANTS

due to un-employment Incapacity to work because of ---

-Invalidity or infirmity –PERMANENT OR TEMPORARY

Old age

Gratuity- A Gracious payment to statutory right. . Sec. 13. Protection of gratuity: No gratuity payable under the Act shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.

Gratuity to an employee cannot be attached by the Court.- G. Narayana Rao v V. R. Nagimani, 1997 Lab IC 902 (Kant)

Attachment of gratuity to dependants. In view of provisions of S. 60(1)(g) of CPC and also S. 4(1) read with 13 of PGA, gratuity payable under the Act to legal representative of deceased Govt employee does not lose its character and is not liable to attachment in execution of any decree of civil court. D. Vimala v Canara Bank, (1980) 1

Cur LR 228 (AP)

Appropriate Government. 2(a)

Central Govt. - 1. Establishment Belonging to or under the

control of Central Govt.(+ 10 employees)2. Establishment Having branches in more

than one state. It is different from Factories.

3. Factory belonging to or under the control of the Central Govt.

4. Major Port, Mine, Oil field or Railway company State Government -In other all cases,

The Central Government is the appropriate Government only in relations to an establishment having branches in more than one State. There is no like provision in relation to such an establishment having factories in different States-Jeewanlal Ltd v Appellate Authority, (1984) 4 SCC 356: 1984 SCC (L&S) 753.

Who is eligible to claim gratuity?

EMPLOYEE –Sec. 2(e). (Other than an apprentice. Includes Manager/ Supervisors)

– Does not include a Govt. servant who is governed by any other Act or by any rules providing for payment of gratuity. PERFORMING -

– Skilled, Semi & Un-Skilled, Manual, Supervisory, Technical, Clerical Work.

– NO SALARY LIMIT w.e.f. 26 Nov 92.

A trainee outside the Apprentices Act, q961 is covered by the definition of ‘employee’. Orissa Mining Corporation Ltd v Controlling Authority under PGA, (1994) 2 LLN 1130: (1995) 1 LLJ 381 (Ori)

House worker not working in any establishment would be an employee under the Act. .Bagi Beedi Factory v Appellate Authority under PGA, (1998) 1 LLN 582: (1998) 93 FJR 416

Establishment not defined: Shops, hotels, temples, municipal boards, Cantonment Boards, Electricity Boards, Educational Institutions, Motor Transports, Clubs, Trusts & Societies registered under the Societies Registration Act, 1860

Condition:Ten or more employees and not persons in any ;

Time limit for payment of Gratuity: Thirty days. An employee, if his date of super-annuation is known can apply 30 days before his retirement.

How to calculate Gratuity ? 1. Max. gratuity : Rs. 3.5 Lakhs [u/s

(3)] w.e.f. 1998 (Wage = Basic + DA)

How to calculate gratuity Wage/26 x 15 x No of completed year Of service

No. of days for which gratuity is to be paid on rendering one year service

Seasonal Estb. : 7 days Others : 15 days

Forfeiture of gratuity S. 4(6)(b)

Wholly or Partially – If employee is terminated for

1. Riotous or Disorderly conduct2. Any other act of violence3. An offence involving moral

turpitude, committed in the course of employment.

Forfeiture to the extent of damage/loss . Sec. 4(6)(a)

If terminated for any act, willful omission or negligence causing any damage/ loss/ destruction to the property of employer

Before forfeiture, the disciplinary proceedings should quantify the loss or damage.-D.V.Kapoor v UOI, 1990(4) SCC 314.

If a workman is guilty of a serious misconduct such as acts of violence against mgt or other employees or riotous or disorderly behavior in or near the place of employment, which though not directly causing damage, is conducive of grave indiscipline, then his gratuity can be forfeited in its entirety. (1973) 2 SCC

502; 1973 SCC L&S 570.

Gratuity of an employee cannot be withheld even if disciplinary proceeding is pending against him. B.L. Gopalakrishna v Karnataka Soap & Detergents Ltd, 1996 Lab IC 140 (Kant). .

Gratuity of an employee dismissed for slow-down of work cannot be withheld since there is no such bar in the Act. –Permali Wallance Ltd v State of M.P. (1996) 2 LLJ 515 (MP)

Rightful claim of gratuity cannot be defeated on the ground of technicality such as limitation. Controlling Authority has condoned the delay and High Court in writ jurisdiction cannot interfere with said finding of the authority.

Mineral Area Development Authority v State of Bihar, (1988) 3 LLN 484 (Pat)

Damages for occupying quarter cannot be withheld from gratuity . Rajender Pai H v Canara Bank, (1998)1 LLJ 577 (Ker)Gratuity cannot be withheld for not vacating the company’s quarter .Madan Mohan Laik v Voal India Ltd, 1997 Lab IC 240 (Cal)

When an employee is entitled ? S. 4

1. On superannuations2. On retirement3. On resignation4. On death5. On disablement

Compulsory premature retirement challenged in Court can not be a ground for with holding of gratuity – post retiral benefit

Brundban Sahu V Orissa SRTC Ltd. 1992 Lab IC 1335 (Ori)

Retirement includes retrenchment.

If rendered 5 yrs. Continuous service

Not applicable

Continuous service: Sec. S-A. Includes absence on account of public holidays, weekly holidays, sickness, maternity leave, accident, leave, absence without leave in absence of an order treating that absence as break in service in accordance with standing Orders/ rules/ regulations;Lay-off, strike or lock-out or cessation of work not due to any fault of the employee240 days / 190 day below ground in a mine in preceding 12 calendar months

Process of claiming gratuity. S. 7– Application to be made to employer– Employer to determine the gratuity and

inform person as well as the controlling officer.

– Employer to pay gratuity within 30 days from the date it becomes payable.

– If delay, the employer to pay simple interest from the date it became payable

– In case of dispute, the employer has to deposit the admitted amount with CA

– Controlling Authority appointed U/s 3 Appellate Authority appointed U/s 7(7), 7(8)

– Inspector U/s 7A. w.e.f. 01.07.84 – C.A. can award compound

interest on delayed payment at such rate as specified by Central Govt.

– Interest can not be more than amount of gratuity.

Condonation of delay before Controlling Authority – Rule 10 – 90 days of concurrence of cause

The Controlling Authority may accept any application under this sub-rule, on sufficient cause being shown by the applicant, after the expiry of the specified period.

Natraja Pillai V Regional Joint Labour Commissioner & Ors, 1993 I LLJ 674 (HP)

Whether it was mandatory to file Separate application for condonation of delay

Condonation of delay in appeal– Period of appeal – 60 days– Max. condonation – 60 days– Appellate Authority can not condon

beyond 120 days.– Western Coalfields Ltd. V Cont. Authority

under PGA, Jabalpur : 2000 Lab IC 3458 (MP)

– Rules prescribing for limitation are only procedural and do not intend to extinguish right of employees. Moreover when employer has benefited from money belonging to employees. He can not resist claim on technical plea of limitation.

– P. Rama Rao V Cont. Authority & ALC(C), Vijayawada & Ors., 1996 Lab IC 2765 (AP)

S. 7(7)

Appellate Authority has powers to remand the matter to the Controlling Authority for fresh disposal.East India Company Ltd v Appellate Authority under Payment of Gratuity Act, (1993) 1 LLN 831 (AP)

Central/State Govt employees are not governed by PGA,

The President has no powers to withhold gratuity of a employee after his retirement as a measure of punishment.Gratuity is also a statutory right. D.V.Kapoor v UOI, 1990 (4) SCC 314

Questions, if any