What is the Payment of Gratuity Act, 1972?
The Payment of Gratuity Act, 1972 is an act to provide gratuity to the employees working in factories, oil fields, plantations, ports, etc. It extends to the whole of India. (In the case of plantations and ports, it shall not extend to the state of Jammu and Kashmir). It came into effect from 16th September 1972.
Highlights of Payment of Gratuity Act, 1972
1) The Payment of Gratuity Act, 1972 shall apply to the following:
- Factory, mine, oilfield, plantation, port and Railway Company.
- Every shop or establishment or any other establishment notified by the central government in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.
2) An employee (not employed in a seasonal establishment) is said to be in continuous service under the employer for a period of one year if the employee has worked for:
- One hundred and ninety days below the ground in a mine or in an establishment which works for less than six days a week.
- Two hundred and forty days, in any other case.
3) An employee (not employed in a seasonal establishment) is said to be in continuous service under the employer for a period of six months if the employee has worked for:
- Ninety-five days, below the ground in a mine or in an establishment which works for less than six days a week.
- One hundred and twenty days, in any other case.
4) To calculate the number of days on which an employee has actually worked under an employer, the following days are also considered:
- The period for which the employee has been laid-off under an agreement or by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 or the Industrial Disputes Act, 1947 or any other applicable law.
- If the employee has been on leave with full wages, earned in the previous year.
- Absent due to temporary disablement caused by accident arising out of and in the course of his employment.
- In the case of a female employee, the period of maternity leave.
5) An employee (employed in a seasonal establishment) is said to be in continuous service under the employer for a period of one year or six months if he has actually worked for not less than seventy-five percent of the number of days on which the establishment was in operation during such period.
6) The appropriate government shall appoint any officer as a controlling authority (Section 3), who shall be responsible for the administration of this act.
7) Under the Payment of Gratuity Act, 1972, gratuity shall be payable to an employee on the termination of his employment on the following grounds after he has rendered continuous service for not less than five years:
- Retirement or resignation.
- Death or disablement due to accident or disease.
8) If the termination of the employment is due to death or disablement, five years of continuous service shall not be necessary.
- In the case of death of the employee, gratuity payable to him shall be paid to his nominee.
- If no nomination has been made, it shall be payable to his heirs.
- If the nominee or heir is a minor, the share shall be deposited in the bank or financial institution by the controlling authority.
9) The employer shall pay gratuity to an employee at the rate of:
- Fifteen days wages for every completed year of service.
- Average of the total wages received for a period of three months, in the case of piece rated employees (Overtime wages are not considered).
- Seven days wages for each season, in the case of seasonal employees.
10) Section 4A of the act is regarding the provision of compulsory insurance to the employees.
- If an employer fails to make any insurance premium payment or fails to contribute to an approved gratuity fund, he shall be liable to pay the gratuity amount (including interest for delayed payments) to the controlling authority.
- If any person contravenes the above provisions, he shall be punishable with a maximum fine of ten thousand rupees and a fine of one thousand rupees for each day, in the case of a continuing offence.
11) Inspectors (Section 7A) shall be appointed by the appropriate government for the purposes of this act.
12) Any person who makes false statements or false representations to avoid any payment to be paid by himself or any person under this act shall be punishable with a maximum imprisonment of six months or with a maximum fine of ten thousand rupees or with both.
- Any employer who contravenes any provisions of this act shall be punishable with imprisonment for a term which shall not be less than three months but may extend to one year, or with fine which shall not be less than ten thousand rupees but may extend to twenty thousand rupees, or with both.
- If the offence is related to the non-payment of any gratuity, then the employer shall be punishable with imprisonment for a term which shall not be less than six months but may extend to two years or lesser term of imprisonment or the imposition of a fine decided by the court.
Best Books to Prepare for UGC NET Labour Welfare
List of best books for Labour Welfare
Trueman's UGC NET HRM/Human Resource Management & Labour Welfare
Human Resource Management by Biju Varkkey, Gary Dessler
Industrial Relations, Trade Unions and Labour Legislation by P.R.N. Sinha, Indu Bala Sinha
International Human Resource Management by Edwards and Rees
Human Resource Management by K Aswathappa
Human Resource Management by Stephen P. Robbins
Industrial Relations and Labour Laws by S C Srivastava
Organizational Behaviour by Stephen P. Robbins, Timothy A. Judge
How to Prepare for UGC NET Paper 2 Labour Welfare?
Candidates preparing for UGC NET Exam as Labour Welfare for paper 2 have to prepare every topic from the syllabus very carefully. Below are some tips to Crack UGC NET Labour Welfare Exam.
- All the applicants are also advised to solve as many UGC NET Previous Year Papers as possible. Previous Year Papers give you an idea of what to expect in the examination, it prepares you for the types of questions asked in the examination.
- UGC NET Mock Tests are also proven to be a great tool for preparation.
- Maintain a proper schedule for the preparations.
- Make weekly and monthly goals and try to adhere to them.
- Keep making short notes of the topics, they will help you in quick revision at last.
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