Gratuity & It’s Application

Meaning Of Gratuity 

Gratuity is financial compensation paid to an employee by his employer at the end of the tenure of the job, without any assistance from the employee. The amount of gratuity was discretional before 1972 and it was established for the organization to pay gratuity to its employee during retirement. 

The Payment of Gratuity Act, 1972 was established by the Parliament to introduce a system for the mortgage of gratuity to employees employed in workshops, tunnels, oil fields, haciendas, ports, railway companies, stores, or other companies.

The primary goal of this statute is to provide social security for operators. This act covers a wide range of social security issues. It is critical to remember that no gratuity owed as a result of this act will be used to assist in the execution of any judgment or the administration of any civil or criminal court. As a result, this legislation is a crucial social welfare statute.

The Above Act Applies To: 

1. Each shop or business within the application of any legislation for the extent remaining in force regarding shops and companies in a State. 
2. Such other corporations or groups of businesses, in which ten or more workers are employed, on any day of the leading twelve months, the Central Government may, by information, designate in this service. It is relevant to notice that a store or business to which this Act has grown applicable shall remain to be administered by this Act notwithstanding that the number of bodies exercised therein at any time following it has grown so appropriate falls beneath ten. 
3. each employee including any person who is operated for wages, whether the duration of such employment is direct, or intended, in any sort of job, hand-operated or oppositely, in or in consolidation with the work of a factory, mine, oilfield, plantation, port, railway company, shop or different corporation to which this Act concerns, but does not constitute any such person who continues a post beneath the Central Government or a State Government and is administered by any other Act or by any commands catering for the amount of gratuity. 

When Gratuity Expense Is Payable:

The expense of gratuity becomes due on the terminus of the employee’s profession after he has contributed endless duty for not less than five years, and the related expense to be reimbursed to the worker or his appointee by the company (after the death of the employee) on following occurrences: 

1. On his termination on accomplishment by the representative of such age as is fixed in the agreement or circumstances of duty as the age on the accomplishment of which the company shall relinquish the work. 
2. on his retirement or withdrawal (Retirement involves termination of the duty of an employee differently than on superannuation and retirement indicates termination of duty on retiring/transmitting the duty by the employee at his personal accord) 
3. On his (employee’s) death or being disabled because of any misfortune or illness, presented that the fulfillment of the consecutive duty of five years shall not be required where the termination of the work of any operator is because of death or disablement.