Page 310 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 13: Industrial Law

Besides, a legal heir may apply within one year from the date the gratuity becomes payable. Notes
Any delayed application for payment of gratuity should also be entertained by the employer, if
there is sufficient cause for the delay.
The gratuity should be paid in cash, or by Demand Draft or cheques. If the amount of gratuity is
less than 1000/-, then it may be paid by postal money order, at the desire of the payee. Details
of payment of gratuity should be intimated by the employer to the controlling authority Assistant
Labour Commissioner (Central) of the area.

Forfeiture

If the services of an employee have been terminated for any act of willful omission or negligence
causing any damage or loss to, or destruction of, property belonging to the employer, his
gratuity can be forfeited to the extent of the damage or loss so caused to the employer. The
gratuity payable to an employee can be wholly forfeited, if the services of such employee have
been terminated for his riotous or disorderly conduct or any other act of violence or an offence
involving moral turpitude committed by him in the course of his employment.

Did u know? The limit on maximum amount of gratuity exempt from the income-tax has
been raised from 1, 00000 to 3, 00000 w.e.f. 1.4.1995 vide Notification No. 9959.

Nomination

1. An employee who has completed one year of service has to name his/her nominee in the
prescribed form. An employee in his nomination can distribute the amount of gratuity
amongst more than one nominee.
2. If an employee has a family at the time of making the nomination, it has to be made in
favour of one or more members of the family.
3. If nomination is made in favour of a person who is not a member of his family, the same
is void. However, if the employee has no family at the time of making a nomination, he
can make the nomination in favour of any person.

4. If such employee acquires a family subsequently, then such nomination becomes invalid
forthwith, and the employee has to make a fresh nomination in favour of one or more
members of his family.

5. Nomination once made can be modified, after giving due notice to the employer. If a
nominee predeceases the employee, a fresh nomination is required to be made.
6. A person who is entitled to gratuity has to apply himself/herself or through an authorised
person to the employer for gratuity within the prescribed time, the employer has to
consider the same.
7. Similarly, the employer has to give notice to the person entitled to gratuity and to the
controlling authority immediately after it became payable, specifying the amount of
gratuity, and thereafter make arrangements for its payment.

Settlement of Claims

The employee and the employer or any other person raising the dispute regarding the amount
of gratuity, may make an application to the controlling authority to decide the dispute. No
appeal by an employer shall be admitted, unless the employer produces a certificate of the

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