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Unit 14: The Payment of Gratuity Act, 1972

Notes

Notes The fancily consists of:

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

(ii) In the case of female employee, herself, her husband, her children, whether married
or unmarried, her dependant parents, and the dependant parents of her husband,
and the widow and children of her predeceased son, if any.

A female employee can exclude her husband from her family by a notice in writing to the
controlling authority. In such event, her husband and his dependent parents will not be deemed
to be included in her family unless the said notice is subsequently withdrawn.
3. Wages: The term `wages’ under the Act 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, overtime wages and any other allowance.
4. Retirement: The term “retirement” has been defined under the Act as the termination of
the service of an employee otherwise than on superannuation. Superannuation means the
attainment of such age by the employee is fixed in the contract or conditions of service as
the age on the attainment of which he has to leave the employment where there is no such
provision, then attainment of the age of 58 years by the employee.

Self Assessment

Fill in the blanks:

4. The term `completed year of service’ means continuous service for ................ year.
5. A ................ employee can exclude her husband from her family by a notice in writing to the
controlling authority.
6. The term ................ has been defined under the Act as the termination of the service of an
employee otherwise than on superannuation.

14.3 Rights, Obligations and Benefit of the Employer

Following are the Rights and Obligations of the Employer:

1. Employers Duty to Determine and Pay Gratuity

Section 7(2) lays down that as soon as gratuity becomes payable the employer shall, whether the
application 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.

Section 7(3) of the Act says that the employer shall arrange to pay the amount of gratuity within
thirty days from the date of its becoming payable to the person to whom it is payable.
Section 7(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 the rate of 10 per cent
per annum:

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