Payment of Gratuity Act

Purpose & Object The Payment of Gratuity Act, 1972 has been enacted to provide for a scheme for payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments upon their superannuation, retirement, resignation, death or disablement due to accident or disease.
Applicability
  • Payment of Gratuity Act, 1972 extends to whole of India.
  • It applies to every factory, mine, oilfield, plantation, port and railway company, shop or establishment in which 10 or more persons  are or were employed on any day of the preceding 12 months;
  • It applies to all such other establishments or class of establishments in which 10 or more persons are or were employed on any day of the preceding 12 months as the Central Government may, by notification, specify in this behalf.
Eligibility Gratuity is payable to employees who have rendered continuous service of at least 5 years.

Maximum Limit
  • Employees covered under the Act are entitled for maximum amount of gratuity of Rs. 10,00,000/-
  • The employer may be pleased to offer better terms of gratuity. However, any amount exceeding the maximum prescribed limit of gratuity (Rs. 10,00,000/-) becomes taxable in the hands of the recipient..
Rate of Gratuity
  • Gratuity is payable at the rate of 15 days' last drawn wages by the employee concerned for every completed year of his service or part thereof in excess of 6 months.
  • In case of a monthly rated employee, 15 days' wages shall be calculated by dividing the last drawn monthly wages by 26 and multiplying the quotient by 15.
  • In case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of 3 months immediately preceding the termination of his employment (without taking into account the wages paid for any overtime work).

Services We Offer

We are Labour Law Consultants and at PCS, we provide following services in compliance to the provisions of Payment of Gratuity Act, 1972:

  • Providing day to day consultancy on matters pertaining to payment of gratuity;
  • Obtaining Registration of establishment with the Controlling Authority;
  • Assistance in calculating the amount of gratuity payable to an employee;
  • Assistance in obtaining appropriate Gratuity Plan from insurance companies for meeting the liability of employer towards payment of gratuity;
  • Formation of Approved Gratuity Fund;
  • Assistance in payment of contribution to the Approved Gratuity Fund;
  • Preparation & filing of returns with the Controlling Authority;
  • Assistance in ensuring compliance of various provisions of the act related to disclosures, notices, displays, deductions, forfeiture etc;
  • Replying / Satisfying Show Cause Notices issued by Inspector / Controlling Authority;
  • Representing the establishments before Inspector / Controlling Authority;
  • Assistance at the time of inspection and search of any premises by Inspector;
  • Representing establishments at the enquiries conducted by the inspector;
  • Representing establishments before the Appellate Authority.

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