Category Archive Labour & Service Law Guide

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Rights of Employees in India

There are several laws in India which are specifically enacted to protect the interest of the employees. A developed and dedicated workforce is a pre-requisite for any organisation to grow. Here a few rights of employees starting from “ right to take leave” to “receiving gratuity benefits” that every employee must know-
 

Written Agreement

An employer is required to provide a written employment before you commence work. An employment agreement is a legal document which stipulates the terms and conditions of the agreement. It states the rights and duties of the employee and the employer. It gives both parties security and protection. When you sign an agreement it provides a sense of security to both the parties. An employment agreement also prevents potential disputes between the employer and the employee. You can seek professional assistance before you sign or accept the employment agreement. Some of the important clauses of the written agreement are- 

  • Compensation
  • Roles and responsibilities 
  • Working hours 
  • Job Designation 
  • Non-disclosure of confidential information 
  • Dispute resolution method
     

Right to take a leave

In most cases, during the tenure of employment, an employee is given the following types of leaves- 

  • Casual leave-  An employee is given certain causal leaves in a year to take care of any urgent or emergency family matter. 
  • Sick leave- These are the leaves that an employee is entitled to take when he or she is ill. 
  • Earned leaves- These are those leaves that are planned for in advance. 
  • Other leaves- Besides the above-mentioned leaves there are certain leaves that could be paid or unpaid and are provided at the discretion of the employer. 

Related Post: Are you working overtime? Know these Laws 
 

Protection from Sexual Harassment at Workplace

It is the prime concern of the employer to ensure that his/her employees are protected while at work. Aggrieved women can seek remedy under the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act 2013. The company’s policy must clearly state what constitutes sexual harassment and stipulate the online grievance mechanism.  As per the law, in the case of ten or more employees, the organisation should have an internal complaint committee. The committee should include a senior woman as a member and two other employees as a member. 

Related Post: Laws on Sexual Harassment at workplace in India
 

Right to receive Gratuity 

Gratuity is the statutory right of an employee which is given to those who have completed five years of continuous service with the organisation. It cannot be denied on the ground that the employer is providing for provident fund and pension benefits. The employee gets this benefit of gratuity on completion of employment which could be either on death, retirement or termination. It is a defined retirement benefit plan which is calculated on the basis of last drawn salary. It is an important form of social security and it is considered as the gratitude of the employer. The amount of gratuity increases with the amount of liability and tenure of employment. 
 

Right to receive pay for public holidays

India observes three public holidays Republic Day (26 January), Independence Day (15 August) and Gandhi Jayanti (2 October). It is compulsory to grant leave to all employees on all three days irrespective of the establishment.  
 

Equal pay for men and women

Our constitution mandates equal pay for equal work for both men and women under Article 39(d). Equal pay also includes all the other benefits and allowances. The Equal Remuneration Act, 1976 obligates the employer to pay equally for equal work. 
 

Right of employees on probation

Usually, the probation period for employees is 6 months. The employer can extend it maximum for three months. The probation period cannot exceed for more than two years.  
 

Right to get insurance

As per the Employee State Insurance Act 1948, in case of any kind of mishappening during the course of employment.
 

Maternity/Paternity benefit

Every female employee has the right to get 26 weeks of paid maternity and creche facility. Maternity benefit has been specifically enacted to safeguard the interest of the pregnant women at the workplace. The prenatal leave can also be availed for eight weeks. The law also provides leave for 12 weeks on adoption of a child less than three months old.

Non-compliance with any of these obligations entails penalty and even prosecution in some cases.

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Illegal Termination and Salary Due Recovery

If you sue a former employer for wrongful termination, you are asking the jury to award you money, called damages. Monetary damages are usually the only remedy available in a wrongful termination lawsuit. . The purpose of monetary damages is to compensate you for what you lost because of the employer’s actions. You will have to prove not only that you suffered losses because of the employer’s wrongful actions, but also the amount of those losses.

Your employment with a private company is governed by the letter of appointment issued to your by the company and comes under the ambit of Contract Act.

Did you sign any contract of employment before joining the company?

If so, what were the terms of termination of employment in the contract?

Any employment with a private company is managed by the letter of appointment issued by the company and comes under the ambit of the Indian Contract Act.

The legal recourse starts by sending a legal notice to the company for the illegal termination and to recover any dues as per the terms of your employment with the company. In case of no reply to the legal notice one may choose to file a civil suit for recovery of legitimate dues like unpaid salary, salary in lieu of notice period not allowed to serve, PF, gratuity and so on.

However, one must keep in mind that the court cannot grant reinstatement as private employment is covered under the contract act which means the maximum available remedy is only to recover the monetary losses one suffered due to the illegal termination.

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Laws on sexual harassment at workplace in India

Sexual Harassment at Workplace: Myths and Verity

Sexual harassment is a type of prejudice based on sex primly attacking the modesty, dignity, obeisance of an individual. When someone is sexually harassed at the workplace it can affect the persona in many ways; it undermines the potential of a person to work and perform well at the workplace. Employers who do not take steps for prevention of sexual harassment at workplace can suffer a major loss in the productivity of the organization and suffer legal expenses if they are unable to fulfill the regulations prescribed under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

We have divided this article into various sections in order to provide ease of understanding to the reader about various complexities embargoed under the Sexual Harassment Act. The article is divided under following categories-:

A. Sexual Harassment
B. Compliance under the Sexual Harassment Act

Sexual Harassment

Sexual Harassment results in the violations of fundamental rights of women of equality under section 14 and 15 of the constitution of India and right to life and live with dignity under article 21 of the constitution of India and right to practice any profession, trade, business which includes a right to have a safe working environment.

Sexual harassment includes any unwelcome behavior or act of conduct of sexual in nature.
 

Types of Sexual Harassment at Workplace

(i) Quid Pro Que Sexual Harassment (This for That)

When a designated senior puts a condition on a female employee to perform a certain act which is unwished assuring her for a favor in return. This concept is basically called “This for that”.

(ii) Hostile environment: Is created when an employee constantly and repeatedly does certain acts of sexual nature. 

  • Sexual pranks, or repeated sexual teasing, jokes, in person or via e-mail; 
  • A demand or request for sexual favor; 
  • Asking for Verbal or Non Verbal advances; 
  • Touching or grabbing; etc. 

Compliance Under Sexual Harassment Act

There are various compliance requirements which need to be adhered to by an organization. Without going into the details, the bullet requirements to be complied under the Sexual Harassment Act is as follows-:

(i) Drafting and implementation of Sexual Harassment Policy-: The organization needs to carefully draft a sexual harassment policy which should cover the basic points such as-:

  • ICC Composition: names, designation and contact details of the ICC members.
  • What constitutes as a sexual harassment act like verbal, physical, quid pro quo etc.

The policy should include the procedure for Resolution, Settlement, Prosecution, inquiry and trial procedure to deal with  

(ii) Amendment to the Employment agreements-: What organization fails to do is to amend their employment agreements to be in tune with the SH policy. This is also an important aspect as the employee signs the obligations under the employment agreement at the time of joining. 

(iii) Formation of Internal Complaints Committee (“ICC”)-: This is one of the prime duties for an employer to adhere to the following conditions. The composition of the ICC should constitute of a female “Presiding Officer” at prominent designation, (ii) two members who have legal knowledge and have had experience in social work, (iii) one person who is familiar with the sexual harassment issues or a person from NGO, (iv) it is required that more than 50% of the members are females in the committee.  

(iv) Sensitization of the ICC and Employees-: This is one of the key factors to be adhered to by the organization for the prevention of Sexual Harassment at Workplace.
Sensitizing the employees (both males and females) about sexual harassment, that constitutes sexual harassment and repercussion thereof.
Orientation programmers or seminars for the member of the internal committee
Involve females in the workshops to make the workshop more effective and include case studies for better understanding.
Establish a better security system in the office. For eg, cameras in the cabins and corridors. 

(vi) Filling of Annual Report by ICC -: The organizations are required to file reports providing various information such as-: The ICC shall prepare annual report under section 21: (i) number of sexual harassment complaints received in a year; (ii) number of complaints disposed of in a year; (iii) number of cases pending for more than 90 days; (iv) number of awareness programs or workshops against sexual harassment conducted in a year; (v) nature of action taken by the employer or district officer; and (vi) where no such report is required to be prepared, intimate such number of cases, if any, to the District Officer. (As per section 22 of Sexual Harassment Act) 
 

Conclusion

An increasing trend of complaints of sexual harassment at workplaces shows the increasing awareness. The main objective of Act is to ensure safe and secure environment to every woman, irrespective of her age, employment status, freedom from all forms of sexual harassment by making the employer responsible for the same. Cases like TERI, Tehalka have set an example that how such eminent organizations face loss of reputation if not complying with Sexual Harassment Act. The punishment prescribed for non-compliance under the Sexual Harassment Act is fine upto Rs. 1,00,000/- or cancellation of license to carry out the business/service by the organization, which might ultimately lead to defamation; attacking the name and goodwill of the organization. As a learned person has quoted that “it takes years to build reputation, but a moment to lose it”

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Are you working overtime? Know these Laws!

Ever slept in the Office working overtime? Wanting to reach the company target or have loads of pending work to complete? Overtime working is a very common thing in a corporate sector. Whether it is to meet the deadline or because of a demanding work or you simply wish to influence the management team that you are working hard, you agree to work for fifteen hours a day or so and forgo anything resembling a normal life.

Working overtime refers to the time in excess of one’s regular working hours. In India, normal working hours constitute 8-9 hours per day and 48 hours per week. Generally, if someone is working more than the normal working hours, one is eligible to get compensation for the same.

In many Employment agreements, it is normally stated that an employee must work for extra hours as required by the company. Working overtime must be at the discretion of an employee, not forced down by an agreement.

Laws governing Overworking Schedules


There are several Acts governing overtime and overhead payment. The laws that concern your overtime working hours and payment regarding the same are shared as follows:

Factories Act, 1948

Generally, the working hours stated by the Factories Act, 1948 is taken as a typical period.  According to Section 59 of the Act, no one is supposed to work beyond 8-9 hours per day and according to Section 51, no is supposed to work for more than 48-50 hours in a week.

Minimum Wages Act,1948

Under Sec. 33, it is mentioned that for overtime, wages are to be paid at the rate of twice the ordinary rates of wages of the worker. The employer can take actual work on any day up to 9 hours in a 12 hours shift, but he must pay double the rates for an hour or part of an hour of actual work in excess of nine hours or for more than 48 hours in any week.

Sec. 14 of the Act, any worker whose minimum rate of wages is fixed with wage period of time, such as by hour, by the day or by any such period and if a worker works more than that number of hours, it is considered to be overtime. In case if the number of hours constituting a normal working day exceeds the given limit, then the employer will have to pay him for every hour or for part of an hour for which he has worked in excess at the overtime rate.

Mines Act, 1952

Under Sec. 28 to 30 of the Act, no person employed in a mine shall be required or allowed to work in the mine for more than 10 hours in any day inclusive of overtime.

Bidi and Cigar Workers (Conditions of Employment) Act, 1966

Sec. 17 & 18 of the Act, stipulates that the period of work including overtime work should not exceed 10 hours in a day and 54 hours in a week.

Plantation Labour Act, 1951

According to section 19, where an adult worker works in any plantation on any day in excess of the number of hours constituting a normal working day or for more than 48 hours in any week, he/she shall, in respect of such overtime work, be entitled to twice the rates of ordinary wages. Provided that no such worker shall be allowed to work for more than 9 hours on any day and more than 54 hours in any week. 

Building and other Construction Workers (Regulation of Employment Service) Act, 1996

According to 28 & 29 of the Act, it is mentioned that a worker who is working overtime will be paid overtime wages at the rate of twice the ordinary rate of wages.

Contract Labour (Regulation & Abolition) Act, 1970

As per Rule 79 of the Act, it is compulsory for every contractor to maintain a Register of Overtime which shall contain all details relating to overtime calculation, hours of extra work, the name of the employee, etc.

Working Journalist (Conditions of Service) and Miscellaneous Provisions Act, 1955

As per Rule 10 of the Act, it is mentioned that a working journalist who works for more than 6 hours on any day in day shift and more than 5½ hours in night shift shall be compensated with rest hours equal to hours for which he/she has worked overtime.


Women and Overtime Working hours

Section 66 of the Factories Act, 1948 imposes a restriction on the employment of women to work between 7.00 pm to 6.00 am. However, this can be relaxed by Chief Inspector, but if the relaxation done exceeds the normal period of Working hours, they are to be paid for overtime hours and they are not permitted to work between 10.00 pm to 5.00 am.

In case they are required to work beyond 10 pm, it is mandatory to provide for special arrangement for the protection of the female employees working before 6 AM and after 8.30 PM, including transport facility. The arrangement of lockers and restroom should be made available for all female employees and they cannot be asked to come for night shift for more than 15 days.

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How to mail to HR for full and final settlement?

What is Full and Final Settlement in payroll?

When an employee is leaving the company, he has to get paid for last working month. This procedure of paying or recovering during the resignation process is called Final Settlement.

Final settlement can be done on the last working payroll month or subsequent months. The employee can be settled first and then resigned or you can resign an employee and then do the final settlement at a later date.

What components are used to decide the final settlement sum?

  • Unpaid Salary (including annual benefits such as leave travel allowance) and arrears, which is calculated as the number of days for which salary is to be paid multiplied by the gross salary divided by 26 (paid days in a month)
  • Unpaid bonus
  • Payment for non-availed leaves, which is calculated as the number of days of non-availed leave multiplied by basic salary divided by 26

Apart from the usual components the following might be applicable:

  • Gratuity, if four years and 240 days have been completed
  • Pension
  • Deductions include profession tax (if applicable), provident fund, income tax and compensation for notice period not served.

What is the period of settlement?

As far as the period for settlement is concerned, the final settlement needs to happen on an employee’s last working day at the organisation. However, as clearances take time, it is a prevalent policy to do so within 30-45 days after the employee has left.

For gratuity, the stipulation is 30 days after leaving the company, while bonuses must be paid within the specified accounting year.

 

What necessary measures that an employee must do to ensure no complications?

  • Make sure to settle any advances taken or get it adjusted in the final settlement.
  • Get a copy of all the various clearances required from the different departments of the organisation that you were attached with.
  • Refer to the standing orders of the company, employee rule book, HR policy handbook etc. All such policies should be kept within the reach and knowledge of the employee. If these policies are not available with you may demand these and also try and obtain from some colleague.
  • Instead of making verbal communications you should address written representation under acknowledgment to your HR contact and narrate all representations by phone (mention phone numbers, date, time etc.) and minutes of discussion, followed by escalation to MD, Chairman, Company Secretary, with a copy to Head-HR and raise your queries.

Under which law can an employee seek relief?

An employee can seek relief under Industrial Employment Standing Orders Act, SE Act applicable to the state, Payment of Wages Act, ID Act as per explanation of employee under these enactments or through Civil Court.

Consult best labour service lawyers near you.

 

What is the general format of a Full and Final settlement letter?

The GM- HR,
………………….(Name of Company)

Re: Issuance of Full & Final Settlement

Dear Sir,

Please refer to my resignation dt…….from the company. I am sorry to state that even after the expiry of …. days from my resignation, my full & final settlement is not made which is a cause of concern to me.

I, therefore, request that my full & final settlement be done & any amount due be sent to me along with the original Statement at the earliest.

thanking you in anticipation.


Best regards,

……….(Name)
……….(Current Address)

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The Payment of Gratuity Act, 1972

PREAMBLE

[39 OF 1972]

An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Twenty-third Year of Republic of India as follows:-

1. SHORT TITLE, EXTENT, APPLICATION AND COMMENCEMENT. –

(1) This Act may be called the Payment of Gratuity Act, 1972.

(2) It extends to the whole of India: Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir.

(3) It shall apply to –

(a) every factory, mine, oilfield, plantation, port and railway company;

(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

(3A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.

(4) It shall come into force on such date as the Central Government may, by notification, appoint.

2. DEFINITIONS. –

In this Act, unless the context otherwise requires, –

(a) “appropriate Government” means, –

(i) in relation to an establishment –

(a) belonging to, or under the control of, the Central Government,

(b) having branches in more than one State,

(c) of a factory belonging to, or under the control of, the Central Government,

(d) of a major port, mine, oilfield or railway company, the Central Government, (ii) in any other case, the State Government;

(b) “completed year of service” means continuous service for one year;

(c) “continuous service” means continuous service as defined in section 2A;

(d) “controlling authority” means an authority appointed by the appropriate Government under section 3;

(e) “employee” means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

Explanation : (f) “employer” means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop –

(i) belonging to, or under the control of, the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,

(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive office of the local authority,

(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;

(g) “factory” has the meaning assigned to it in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948);

(h) “family”, in relation to an employee, shall be deemed to consist of –

(i) in the case of a male employee, himself, his wife, his children, whether married or unmarried, his dependent parents and the dependent parents of his wife and the widow and children of his predeceased son, if any,

(ii) in the case of a female employee, herself, her husband, her children, whether married or unmarried, her dependent parents and the dependent parents of her husband and the widow and children of her predeceased son, if any :

Explanation : Where the personal law of an employee permits the adoption by him of a child, any child lawfully adopted by him shall be deemed to be included in his family, and where a child of an employee has been adopted by another person and such adoption is, under the personal law of the person making such adoption, lawful, such child shall be deemed to be excluded from the family of the employee;

(i) “major port” has the meaning assigned to it in clause (8) of section 3 of the Indian Ports Act, 1908 (15 of 1908);

(j) “mine” has the meaning assigned to it in clause (j) of sub-section (1) of section 2 of the Mines Act, 1952 (35 of 1952);

(k) “notification” means a notification published in the Official Gazette;

(l) “oilfield” has the meaning assigned to it in clause (e) of section 3 of the Oilfields (Regulation and Development) Act, 1948 (53 of 1948);

(m) “plantation” has the meaning assigned to it in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951);

(n) “port” has the meaning assigned to it in clause (4) of section 3 of the Indian Ports Act, 1908 (15 of 1908);

(o) “prescribed” means prescribed by rules made under this Act;

(p) “railway company” has the meaning assigned to it in clause (5) of section 3 of the Indian Railways Act, 1890 (9 of 1890);

(q) “retirement” means termination of the service of an employee otherwise than on superannuation;

(r) “superannuation”, in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service at the age on the attainment of which the employee shall vacate the employment;

(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 are paid or are 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.

2A. CONTINUOUS SERVICE. –

For the purposes of this Act, – (1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing order, rules or regulations governing the employees of the establishment), lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.

(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer –

(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than – (i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and (ii) two hundred and forty days, in any other case;

(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than –

(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and

(ii) one hundred and twenty days, in any other case;

Explanation : For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which –

(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Order’s) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;

(ii) he has been on leave with full wages, earned in the previous year;

(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and

(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.

(3) where an employee employed in a seasonal establishment, is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during such period.

3. CONTROLLING AUTHORITY. –

The appropriate Government may, by notification, appoint any officer to be a controlling authority, who shall be responsible for the administration of this Act and different controlling authorities may be appointed for different areas.

4. 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.

4A. COMPULSORY INSURANCE. –

(1) With effect from such date as may be notified by the appropriate Government in this behalf, every employer, other than an employer or an establishment belonging to, or under the control of, the Central Government or a State Government, shall, subject to the provisions of sub-section (2), obtain an insurance in the manner prescribed, for his liability for payment towards the gratuity under this Act, 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 : Provided that different dates may be appointed for different establishments or class of establishments or for different areas.

(2) The appropriate Government may, subject to such conditions as may be prescribed, exempt every employer who had already established an approved gratuity fund in respect of his employees and who desires to continue such arrangement, and every employer employing five hundred or more persons who establishes an approved gratuity fund in the manner prescribed from the provisions of sub-section (1).

(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).

(4) The appropriate Government may, by notification, make rules to give effect to the provisions of this section and such rules may provide for the composition of the Board of Trustees of the approved gratuity fund and for the recovery by the controlling authority of the amount of the gratuity payable to an employee from the Life Insurance Corporation of India or any other insurer with whom an insurance has been taken under sub-section (1), or as the case may be, the Board of Trustees of the approved gratuity fund.

(5) Where an employer fails to make any payment by way of premium to the insurance referred to in sub-section (1) or by way of contribution to an approved gratuity fund referred to in sub-section (2), he shall be liable to pay the amount of gratuity due under this Act (including interest, if any, for delayed payments) forthwith to the controlling authority.

(6) Whoever contravenes the provisions of sub-section (5) shall be punishable with fine which may extend to ten thousand rupees and in the case of a continuing offence with a further fine which may extend to one thousand rupees for each day during which the offence continues.

Explanation : In this section “approved gratuity fund” shall have the same meaning as in clause (5) of section 2 of the Income-tax Act, 1961 (43 of 1961).

5. POWER TO EXEMPT. –

(1) The appropriate Government may, by notification, and subject to such conditions as may be specified in the notification, exempt any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the provisions of this Act if, in the opinion of the appropriate Government, the employees in such establishment, factory, mine, oilfield, plantation, port, railway company or shop are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act.

(2) The appropriate Government may, by notification and subject to such conditions as may be specified in the notification, exempt any employee or class of employees employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the provisions of this Act, if, in the opinion of the appropriate Government, such employee or class of employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act.

(3) A notification issued under sub-section (1) or sub-section (2) may be issued retrospectively a date not earlier than the date of commencement of this Act, but no such notification shall be issued so as to prejudicially affect the interests of any person.

6. NOMINATION. –

(1) Each employee, who has completed one year of service, shall make, within such time, in such form and in such manner, as may be prescribed, nomination for the purpose of the second proviso to sub-section (1) of section 4.

(2) An employee may in his nomination, distribute the amount of gratuity payable to him, under this Act amongst more than one nominee.

(3) If an employee has a family at the time of making a nomination, the nomination shall be made in favour of one or more members of his family, and any nomination made by such employee in favour of a person who is not a member of his family, shall be void.

(4) If at the time of making a nomination the employee has no family, the nomination may be made in favour of any person or persons but if the employee subsequently acquires a family, such nomination shall forthwith become invalid and the employee shall make, within such time as may be prescribed, a fresh nomination in favour of one or more members of his family.

(5) A nomination may, subject to the provisions of sub-sections (3) and (4), be modified by an employee at any time, after giving to his employer a written notice in such form and in such manner as may be prescribed, of his intention to do so.

(6) If a nominee predeceases the employee, the interest of the nominee shall revert to the employee who shall make a fresh nomination, in the prescribed form, in respect of such interest.

(7) Every nomination, fresh nomination or alteration of nomination, as the case may be, shall be sent by the employee to his employer, who shall keep the same in his safe custody.

7. DETERMINATION OF THE AMOUNT OF GRATUITY. –

(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.

(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.

(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify : Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.

(4) (a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.

(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute.

(c) The controlling authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer.

(d) The controlling authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto.

(e) As soon as may be after a deposit is made under clause (a), the controlling authority shall pay the amount of the deposit –

(i) to the applicant where he is the employee; or

(ii) where the applicant is not the employee, to the nominee or, as the case may be, the guardian of such nominee or heir of the employee if the controlling authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.

(5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority shall have the same powers as are vested in a court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely :-

(a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examination of witnesses.

(6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code, 1860 (45 of 1860).

(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf : Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days.

Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub-section (4), or deposits with the appellate authority such amount.

(8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authority.

7A. INSPECTORS. –

(1) The appropriate Government may, by notification, appoint as many Inspectors, as it deems fit, for the purposes of this Act.

(2) The appropriate Government may, by general or special order, define the area to which the authority of an Inspector so appointed shall extend and where two or more Inspectors are appointed for the same area, also provide, by such order, for the distribution or allocation of work to be performed by them under this Act.

(3) Every Inspector shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code, 1860 (45 of 1860).

7B. POWERS OF INSPECTORS. –

(1) Subject to any rules made by the appropriate Government in this behalf, an Inspector may, for the purpose of ascertaining whether any of the provisions of this Act or the conditions, if any, of any exemption granted thereunder, have been complied with, exercise all or any of the following powers, namely :-

(a) require an employer to furnish such information as he may consider necessary;

(b) enter and inspect, at all reasonable hours, with such assistants (if any),

being persons in the service of the Government or local or any public authority, as he thinks fit, any premises of or place in any factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, for the purpose of examining any register, record or notice or other document required to be kept or exhibited under this Act or the rules made thereunder, or otherwise kept or exhibited in relation to the employment of any person or the payment of gratuity to the employees, and require the production thereof for inspection;

(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer or any person whom he finds in such premises or place and who, he has reasonable cause to believe, is an employee employed therein;

(d) make copies of, or take extracts from, any register, record, notice or other document, as he may consider relevant, and where he has reason to believe that any offence under this Act has been committed by an employer, search and seize with such assistance as he may think fit, such register, record, notice or other document as he may consider relevant in respect of that offence;

(e) exercise such other powers as may be prescribed.

(2) Any person required to produce any register, record, notice or other document or to give any information by an Inspector under sub-section (1) shall be deemed to be legally bound to do so within the meaning of sections 175 and 176 of the Indian Penal Code 1860 (45 of 1860).

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall so far as may be, apply to any search or seizure under this section as they apply to any search or seizure made under the authority of a warrant issued under section 94 of that Code.

8. RECOVERY OF GRATUITY. –

If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto :

Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate :

Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.

9. PENALTIES. –

(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both.

(2) An employer who contravenes, or makes default in complying with, any of the provisions of this Act or any rule or order made thereunder shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to one year, or with fine which shall not be less than ten thousand rupees but which may extend to twenty thousand rupees, or with both :

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 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 of a fine would meet the ends of justice.

10. EXEMPTION OF EMPLOYER FROM LIABILITY IN CERTAIN CASES. –

Where an employer is charged with an offence punishable under this Act, he shall be entitled, upon complaint duly made by him and on giving to the complainant not less than three clear days’ notice in writing of his intention to do so, to have any other person whom he charges as the actual offender brought before the court at the time appointed for hearing the charge; and if, after the commission of the offence has been proved, the employer proves to the satisfaction of the court – (a) that he has used due diligence to enforce the execution of this Act, and

(b) that the said other person committed the offence in question without his knowledge, consent or connivance, that other person shall be convicted of the offence and shall be liable to the like punishment as if he were the employer and the employer shall be discharged from any liability under this Act in respect of such offence :

Provided that in seeking to prove as aforesaid, the employer may be examined on oath and his evidence and that of any witness whom he calls in his support shall be subject to cross-examination on behalf of the person he charges as the actual offender and by the prosecutor :

Provided further that, if the person charged as the actual offender by the employer cannot be brought before the court at the time appointed for hearing the charge, the court shall adjourn the hearing from time to time for a period not exceeding three months and if by the end of the said period the person charged as the actual offender cannot still be brought before the court, the court shall proceed to hear the charge against the employer and shall, if the offence be proved, convict the employer.

11. COGNIZANCE OF OFFENCES. –

(1) No court shall take cognizance of any offence punishable under this Act save on a complaint made by or under the authority of the appropriate Government : Provided that where the amount of gratuity has not been paid, or recovered, within six months from the expiry of the prescribed time, the appropriate Government shall authorise the controlling authority to make a complaint against the employer, whereupon the controlling authority shall, within fifteen days from the date of such authorisation, make such complaint to a Magistrate having jurisdiction to try the offence.

(2) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act.

12. PROTECTION OF ACTION TAKEN IN GOOD FAITH. –

No suit or other legal proceeding shall lie against the controlling authority or any other person in respect of anything which is in good faith done or intended to be done under this Act or any rule or order made thereunder.

13. PROTECTION OF GRATUITY. –

No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.

14. ACT TO OVERRIDE OTHER ENACTMENTS, ETC. –

The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act.

15. POWER TO MAKE RULES.

(1) The appropriate Government may, by notification make rules for the purpose of carrying out the provisions of this Act. (2) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall, thereafter, have effect only in such modified form or be of no effect as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.