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Raees Shaikh (Sr HR )     26 April 2013

Compulsory gratuity insurance

Dear Friends,

Please confirm is there any notification with regard to Compulsory Insurance under Gratuity Act in Maharashtra.




Raees Shaikh


 4 Replies

Kumar Doab (FIN)     28 April 2013


Payment of Gratuity Act is a central Act.

(iii) The third amendment made by the Payment of Gratuity (Amendment) Act, 1987 inter alia provided for:-

(d) Compulsory insurance/setting of gratuity fund for payment of gratuity.



Section: 4A
Compulsory insurance


(1) With effect from such date as may be notified by the appropriate Government in this behalf, every employer……………, from the Life Insurance Corporation of India established under the Life Insurance Corporation of India Act, 1956 (31 of 1956) or any other prescribed insurer:


(3) For the purpose of effectively implementing the provisions of this section, every employer shall within such time as may be prescribed get his establishment registered with the controlling authority in the prescribed manner and no employer shall be registered under the provisions of this section unless he has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred to in sub-section (2).

Raj Kumar (ssss)     15 June 2013

Respected Sir

I am working in CBSE affiliated School in Haryana.
My date of joining organisation : 11.04.2007
My Last working day in organisation : 22.01.2012

Since I am not completing 5 years, my company is not willing to pay gratuity amount due to me. As I have gone through different websites, I found a person who has worked 4 years 240 days becomes eligible for gratuity payment, though I didn't find any supporting clause or section. If this is true then I believe I am eligible for gratuity payment.

Can I request your expertise here as I have no knowledge on subject? Am I eligible or not? If yes, can you provide some supporting doc which I can forward to my company so as they pay my gratuity amount.

Many thanks in advance.


Raj Kumar

E-mail:- rajchopra55@gmail.com


Kumar Doab (FIN)     15 June 2013


@ Raj Kumar,


Does the employee also enjoy the same equitable discretion to accept notice pay in lieu of notice period if bank decides to initiate termination?


Are you aware of any incidence where bank has initiated termination and has not accepted the stand of the employee that he shall serve notice period instead of accepting notice pay………………


There are many threads indicating that banks apply tactics and declare that resignation is not accepted, thus employee has absconded, abandoned the employment, abstained from duties, abrupt termination has caused loss, block relieving certificate…………etc.


One month notice should be enough for employer to put his house in order, and arrange and install replacement if needed………….


Employee should carefully structure and draft notice of resignation.

Employee should declare the notice period tendered/last day in office/effective date of resignation and that: all tasks on hand are completed and nothing is pending, routine duties be assigned which can be completed within and up to last day in office, and ask to whom charge and company property be handed over……………..









Refer to:

Section: 2A
Continuous service.

(2) (a) (i) (ii):


Count 4 years from DOJ.

In 5th year count 190/240 days………………….the date of completion of uninterrupted service of 190/240 days shall be your date of reference to which calculation is to be made…………..

The Act is clear. There is no need to cite reference of any court judgment or demand any court judgement.


The teachers have been included in the category of employees eligible for payment of Gratuity with retrospective effect from 1997, and Section 2(e) was inserted.


If the educational institutes have not obtained Compulsory Insurance to arrange for the funds, and thus a resource for payment of Gratuity, then employee is not at fault.

The employer shall have to pay the amounts from it’s own resources.


There are many threads on similar query at:








You can download the judgment in following case:

Mettus Beardsell Ltd., Madrs Vs. RLC(C) 1998 LLR 1072(Mad)




In 5th year you have been in employment of the company for more than 240 days.

In this thread the descripttion by SC and HC has been provided and thoroughly discussed.




Submit FormI to the company under proper acknowledgment and thereafter approach Controlling Authority.



In case of other employee company finally relented when the employee announced to initiate legal proceedings.

Discussion > Labour & Service Law > Gratuity > Query regarding gratuity eligibility




Company can not have its own policy on the payment of gratuity.

It is statutory benefit it has to provide to employee.       






You should also draw the attention of this HR person to word “WHOEVER” in :

Section: 9

(1) Whoever...........................

............ Provided that where the offence relates to non-payment of any gratuity payable under this Act, the employer shall be punishable with imprisonment for a term which shall not be less than [36] [Six months but which may extend to two years] unless the court trying the offence, for reasons to be recorded by it in writing, is of opinion that a lesser term of imprisonment or the imposition 01; a fine would meet the ends of justice.



--------The HR person is not your employer. He is another employee in the company.


Submit FormI under proper acknowledgment to o/o appointing authority/MD by redg. post (avoid speed post/courier). After 10 days obtain POD (free of cost) and certified copy of the run sheet of post man (by paying Rs.10) from sub postmaster of PO from which redg. post was booked.

 Company shall have to pay.


 If you are not able to resolve the matter in your favor on your own, approach your lawyer.




V Kumar (Asipiring L)     13 August 2013

Interesting point by Doab, will check more on Raj's question. I am really interested in the right appraoch and answer when it comes to insurance w.r.t. gratuity. I current wrwite for an insurance blog but didnt know the correct answer to this as well...will look it up and get back too....

let me know what happened in ur case Raj - did the employer agree with the 240 days point?



my blog: www.theinsurer.in

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