Gratuity act

Payment of Gratuity Act, 1972

Gratuity Act refers to the Payment of Gratuity Act, 1972, a legislation enacted in India to provide employees with a retirement benefit called gratuity. Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for their long and meritorious service.

Eligibility:

• To be eligible for gratuity, an employee must have completed a minimum of five years of continuous service with the employer. However, in the case of the employee’s death or disability, the requirement of five years may be waived.
• The Act covers employees working in factories, mines, oilfields, plantations, ports, railway companies, shops, establishments, and educational institutions with ten or more employees.

Claim Process

1. Notice: The employee who is eligible for gratuity must submit a written notice to the employer, either personally or through a nominee or legal representative, within 30 days of becoming eligible for gratuity. The notice should specify the amount of gratuity expected.
2. Calculation: The employer is responsible for calculating the gratuity amount based on the employee’s last drawn salary and the number of years of service completed. As per the Act, the gratuity amount is calculated using the formula: (Last drawn salary × 15/26) × Number of years of service.
3. Payment: The employer must pay the gratuity amount within 30 days from the date it becomes payable. If there is any delay, the employer is liable to pay interest on the outstanding gratuity amount.
4. Nomination: Employees have the option to nominate one or more beneficiaries to receive the gratuity in the event of their death. The nomination should be made in writing and submitted to the employer.
5. Application: After providing the necessary notice, if the employer fails to initiate the gratuity payment process, the employee can file an application for gratuity with the Controlling Authority appointed under the Act.
6. Grievance Redressal: In case of any disputes or non-payment of gratuity, employees can approach the Controlling Authority or Labor Court to seek resolution.

Our Gratuity Act Services include:

1. Consultation and Compliance:
   • We provide expert consultation to both employers and employees, helping them understand the rights, obligations, and intricacies of the Gratuity Act.
2. Calculation and Documentation:
   • Our professionals calculate gratuity amounts accurately, considering factors such as length of service, last drawn salary, and other applicable parameters.
   • We assist in maintaining proper records and documentation related to gratuity, ensuring compliance with the Act’s record-keeping requirements.
3. Claim Processing and Disbursement:
   • We guide employees through the process of filing gratuity claims, ensuring compliance with the Act’s notice and application requirements.
4. Training and Awareness Programs:
   • We conduct training sessions and workshops for employers and HR personnel to enhance their understanding of the Gratuity Act and its practical implementation.
   • Our customized awareness programs educate employees about their rights, eligibility criteria, and the process of claiming gratuity, fostering transparency and trust within the organization.
5. Compliance Audits and Due Diligence:
   • We conduct comprehensive compliance audits to assess an organization’s adherence to the Gratuity Act and identify any gaps or areas for improvement.
   • Our due diligence services help organizations ensure that gratuity obligations are met during mergers, acquisitions, or restructuring activities.

Our goal is to simplify the gratuity process, mitigate risks, and ensure that both employers and employees fulfill their obligations and rights under the Payment of Gratuity Act. Partner with us to streamline your gratuity-related operations and ensure compliance with this important legislation.

Contact The Lawtech today to discuss your Gratuity Act service requirements and let our experts assist you in navigating the complexities of gratuity management.