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Prakash Yedhula (Lawyer)     29 February 2008

Gratuity Calculation


PAYMENT OF GRATUITY.-

(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, -

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease : Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement :

Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.

Explanation : For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned : Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account :

Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.

Explanation : In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

(6) Notwithstanding anything contained in sub-section (1), - (a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.

(b) the gratuity payable to an employee may be wholly or partially forfeited - (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.



Learning

 8 Replies

SANJAY DIXIT (Advocate)     02 March 2008

Thanks for the information.

SAI BABU (MANAGER)     04 March 2008

One employee has not completed five years of service. He joined in our organisation on 01.06.2006. Expired on 15.02.2008.He completed only 1 year 8 months 15 days of service. Whether he is eligible for payment of gratuity? if yes how to caliculate? We think BASIC+DA/26x15 DAYS x NO.OF.YEARS SERVICE. This calculation is correct or not? pl clarify.

partharajagopal (HR)     04 March 2008

Hi He is eligible for gratutiy and can get rs3.5 lac wiithout any sealing reg partha

hrkalyan (n/a)     08 March 2008

Hi Mr.Partha, I think he is legally entitled only for 1 year and 8 months. In some companies, they do not see the provisions in case of death and pay the total gratuity to the legal heir of the deceased. If there is any provision/case law for payment of full gratutity in case of death, please share it with us. Thanks & Regards Kalyan R

v satish kumar (Manager (Finance)     16 November 2013

Sir,

i am working in Food Corporation of India, (Public Sector Undertaking) we are having departmental labourers in which there are ancillary labourers who have MGW (minimum guarantee wage) and mathadi worker who have both basic wages as well as piece rate (including incentive for lead and height) for lifting of bags.  

In case of the above mathadi workers (loaders) & ancillary labourers, How gratuity is calculated in case of death ? please clarify with the formula. 

with regards 

Kumar Doab (FIN)     16 November 2013

 

Always start a new thread.

 

 

 

FCI has : Food Corporation of India (Death-cum-Retirement Gratuity) Regulations, 1967 

 

And

 

Food Corporation of

India (Staff) Regulations, 1971

 

You may peruse these.

 

 

 

 

As per Payment of Gratuity Act, 1972:

 

2.(s) "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which arc paid or arc payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.

 

Section: 4:Payment of gratuity.

(2)

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account.:

Provided further that in the case of [an employee who is employed in a seasonal establishment and who is riot so employed throughout the year], the employer shall pay the gratuity at the rate of seven days wages for each season.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

Indian (Engineer)     25 November 2013

i worked in a software company:

My DOJ to the company is 18-06-2007 and relieving from the company is 28-02-2012, my office working days is 5 days in a week. now almost 1 year 9 months completed, so far i have not got gratuity. am i eligible for gratuity claim? please reply

Kumar Doab (FIN)     25 November 2013

@ Indian

Always initiate a new thread.

Your query is addressed at:

https://www.lawyersclubindia.com/forum/details.asp?mod_id=28779&offset=1#.UpNfItIW1MA


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