Page 133 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes to the employer, shall be forfeited to the extent of the damage or loss so caused. 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.

 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.

 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
or with fine or with both. Also, if an employer 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 or with fine or with both.
Following are the benefit of this Act:

1. The quantum of gratuity is to be computed at the rate of 15 days wages (7 days wages in case
of seasonal establishments) based on rate of wages last drawn by the employee concerned for
every completed year of service or a part thereof exceeding 6 months.
2. The total amount of gratuity payable shall not exceed the prescribed limit.
3. In case where higher benefit of gratuity is available under any gratuity scheme of the Co., the
employee will be entitled to higher benefit
Self Assessment

Fill in the blanks:
10. The quantum of gratuity is to be computed at the rate of ...........................day’s wages.
11. The total amount of ........................... payable shall not exceed the prescribed limit.

7.5 Payment of Gratuity

Section 3 authorises the appropriate government to appoint any officer as a controlling authority
for the administration of the Act. In Maharashtra, the labour courts in different localities are
notified as controlling authorities and the President, Industrial Court; is an appellate authority
under the Act.
There are two conditions that must be satisfied in order to be eligible to get the gratuity benefit

(i) The organization has a minimum of 10 people on payroll, i.e., at least 10 employees receiving
salaries from the organization. Note that people on contract are not considered.
(ii) You have completed at least 5 years with the organization. If an employee dies during the
tenure of his employment, the 5 year rule is relaxed. So, even is such employee's period of
service is as little as 1 year, he/she are eligible to receive gratuity if the first condition is met.

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