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Payment of GratuityAct, 1972
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Concept of Social Security
A protection for self and / ordependants against LOSS OFINCOME andUNDESIRED WANTS
due toun-employmentIncapacity to work because of ----Invalidity or infirmity PERMANENTOR 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 Govtemployee 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. -
1. Establishment Belonging to or underthe control of Central Govt.(+ 10
employees)2. Establishment Having branches in
more than one state. It is differentfrom Factories.
3. Factory belonging to or under thecontrol of the Central Govt.
4. Major Port, Mine, Oil field or Railwaycompany
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 anestablishment having factories in
different States-
Jeewanlal Ltd v AppellateAuthority, (1984) 4 SCC 356:
1984 SCC (L&S) 753.
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Who is eligible to claim gratuity?
EMPLOYEE Sec. 2(e). (Other than anapprentice. Includes Manager/ Supervisors)
Does not include a Govt. servant
who is governed by any other Act orby 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 t i t id th A ti A t
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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 AppellateAuthority 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 & Societiesregistered under the Societies
Registration Act, 1860
Condition:Ten or more employeesand not persons in any ;
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Time limit for payment ofGratuity: Thirty days.
An employee, if his date ofsuper-annuation is known canapply 30 days before his
retirement.
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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 yearOf 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 PartiallyIf employee isterminated for
1. Riotous or Disorderly conduct2. Any other act of violence
3. 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 tothe property of employer
Before forfeiture, the disciplinaryproceedings 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 actsof violence against mgt or other
employees or riotous or
disorderly behavior in or near theplace 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.
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Gratuity of an employee cannot
be withheld even if disciplinary
proceeding is pending againsthim. B.L. Gopalakrishna v KarnatakaSoap & Detergents Ltd, 1996 Lab IC
140 (Kant). .
Gratuity of an employee
dismissed for slow-down of work
cannot be withheld since there isno 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 theauthority.
Mineral Area DevelopmentAuthority 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
1. On superannuations
2. On retirement
3. On resignation
4. On death
5. On disablement
Compulsory premature retirementchallenged in Court can not be a
ground for with holding of gratuity post retiral benefit
Brundban Sahu V Orissa SRTC Ltd. 1992Lab 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 publicholidays, weekly holidays, sickness,
maternity leave, accident, leave,
absence without leave in absence of
an order treating that absence asbreak 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 theemployee
240 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 andinform 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 simpleinterest from the date it became payable
In case of dispute, the employer has todeposit the admitted amount with CA
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Controlling Authority appointed U/s
3 Appellate Authority appointed U/s7(7), 7(8)
Inspector U/s 7A. w.e.f. 01.07.84
C.A. can award compound intereston delayed payment at such rate asspecified by Central Govt.
Interest can not be more thanamount 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 anyapplication under this sub-rule, onsufficient cause being shown by the
applicant, after the expiry of the specifiedperiod.
Natraja Pillai V Regional Joint Labour
Commissioner & Ors, 1993 I LLJ 674 (HP)Whether it was mandatory to file Separateapplication 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 beyond120 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 extinguishright of employees. Moreover when employer
has benefited from money belonging toemployees. He can not resist claim ontechnical 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 matterto the Controlling Authority
for fresh disposal.
East India Company Ltd vAppellate 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 retirementas 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