Gratuity is a sum of money paid by an employer to an employee upon the completion of a certain period of service. In India, the Payment of Gratuity Act, 1972 outlines the rules and regulations related to the payment of gratuity to employees in the country.
According to the Act, an employee is eligible for gratuity if they have completed at least five years of continuous service with the same employer. The gratuity amount is calculated based on the employee's salary and the number of years of service. The formula for calculating gratuity is:
Gratuity = (15 x last drawn salary x years of service)/26
The last drawn salary refers to the employee's average salary over the last 12 months of their service, and the number of years of service is rounded down to the nearest integer. For example, if an employee has completed 7.5 years of service and their average salary over the last 12 months was Rs. 50,000, their gratuity would be calculated as follows:
Gratuity = (15 x 50,000 x 7)/26 = Rs. 16923
In addition to the above formula, the Act also specifies that the maximum gratuity an employee can receive is Rs. 20 lakhs. This cap was increased from Rs. 10 lakhs in 2010 and is subject to periodic revision.
There are certain situations in which an employee may be eligible for gratuity even if they have not completed five years of continuous service. These include death, disability, or termination of employment due to redundancy, retrenchment, or closure of the establishment.
The Payment of Gratuity Act also outlines the procedures for the payment of gratuity to employees. Employers are required to maintain records of gratuity payments and provide employees with a written statement of the amount of gratuity due to them upon the completion of their service. The Act also requires employers to pay gratuity to employees within 30 days of the employee becoming eligible to receive it.
In conclusion, the Payment of Gratuity Act in India provides a framework for the payment of gratuity to employees upon the completion of a certain period of service or in certain circumstances. The Act ensures that employees are fairly compensated for their years of service and provides clarity on the calculation and payment of gratuity.
Gratuity Eligibility in India: Can I Get Gratuity Before 5 Years?
Gratuity is a lump sum that a company pays when an employee leaves an organization, and is one of the many retirement benefits offered by a company to an employee. That the settlement provides for forfeiture only if there is a loss caused on account of misconduct leading to dismissal, is also not in dispute. The section says that for every year of completed service more than six months , the employee can receive gratuity. While dismissing the intra-Court appeal, the Division Bench of the High Court took the view that Section 4 6 a and b have to be read together and only if there is any loss to the Bank on account of the misconduct, then alone, the forfeiture is permissible to the extent of loss. Also, if you have any doubts or queries kindly drop them in the comment section below. Sub-Clause b operates either when the termination is on account of- i riotous or ii disorderly or iii any other act of violence on the part of the employee, and under Sub-Clause ii of sub-Section 6 b when the termination is on account any act which constitutes an offence involving moral turpitude committed during the course of employment. It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude.
Gratuity payment is effective after 5 years of service
If a person gets the gratuity of Rs. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which he may be denied therefrom. The gratuity amount is usually paid to the employee in lump sum based on the number of years of service they render. Bharat Coking Coal Limited and others 3, it has been held by this Court that forfeiture of gratuity either wholly or partially is permissible under sub-Section 6 b ii only in the event that the termination is on account of riotous or disorderly conduct or any other act of violence or on account of an act constituting an offence involving moral turpitude when he is convicted. Force Majeure The Facilities Provider, ABC Companies and any of its Third Party Service Providers shall not be liable for any delay or failure in performance resulting directly or indirectly from acts of nature, forces, or causes beyond their reasonable control, including, without limitation, Internet failures, computer equipment failures, telecommunication equipment failures, other equipment failures, electrical power failures, strikes, virus, other malicious computer code, hacking, labour disputes, riots, insurrections, civil disturbances, shortages of labour or materials, fires, flood, storms, explosions, acts of God, war, earthquake, governmental actions, orders of domestic or foreign courts or tribunals, non-performance of third parties, or loss of or fluctuations in heat, light, or air conditioning. The employer has to pay the gravity within 30 days but they have to mention the date within 15 days of receiving the gravity application.
