Payment of Gratuity

Payment of Gratuity Act, 1972

The Payments of Gratuity Act, 1972

The Payments of Gratuity Act, 1972, (hereinafter referred to as the “Gratuity Act”) is applicable to any office, factory or institution which has employed 10 or more employees in the preceding 12 months irrespective of the post they hold and have completed 5 years of employment. There is no minimum eligibility criteria in case of death or disablement. The amount payable to an employee under Gratuity Act 1972 is calculated on the basis of fifteen days wages for every completed year of service. The employer must pay the amount of gratuity within 30 days from when it is payable.

The Gratuity Act provides for the provision of imprisonment for a term (extendable to six months) or fine (extendable to ten thousand rupees) or both to person/persons who make/s false statement for purpose of delaying or avoiding gratuity amount. Minimum three months imprisonment (extended to 12 months) or minimum ten thousand rupees fine (extendable to twenty thousand rupees) or both to employer if he/she contravenes any provisions of the Gratuity Act.

In case of non-payment of gratuity amount the employer can be punished with imprisonment of a period not less than six months.

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