Payment of Gratuity Act, 1972

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Payment of Gratuity Act, 1972
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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

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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)
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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)
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Appropriate Government. 2(a)

• Central Govt. -
• Establishment Belonging to or under the control
  of Central Govt.( 10 employees)
• Establishment Having branches in more than one
  state. It is different from Factories.
• Factory belonging to or under the control of the
  Central Govt.
• Major Port, Mine, Oil field or Railway company
• State Government -In other all cases,

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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 (LS) 753.
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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.

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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
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• 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
• ConditionTen or more employees and not persons
  in any

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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.
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How to calculate Gratuity ?

• 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

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

• Wholly or Partially If employee is terminated
  for
• Riotous or Disorderly conduct
• Any other act of violence
• An offence involving moral turpitude, committed
  in the course of employment.

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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.

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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 LS
570.
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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)
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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)
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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 companys
quarter .Madan Mohan Laik v Voal India Ltd,
1997 Lab IC 240 (Cal)
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When an employee is entitled ? S. 4

• On superannuations
• On retirement
• On resignation
• On death
• 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
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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/
regulationsLay-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
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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

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• 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.

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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

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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)
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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)
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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
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Questions, if any
Thank you