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Unit 7: The Payment of Gratuity Act, 1972

13. ........................... authorises the appropriate government to appoint any officer as a Notes
controlling authority for the administration of the Act.

7.6 Determination and Recovery of Gratuity

Procedure of determination of gratuity is laid down under section 7 of the Act, which are
mentioned below:
(i) Filing of Application: According to Section 7(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 this employer within such time and in such form, as may be prescribed,
for payment of such gratuity.
(ii) Determination of Gratuity: As soon as under 7(2) 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 determines.

(iii) Payment within thirty Days: According to Section 7(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.
(iv) Interest on gratuity: According to Section 7 (3-A), if the amount of gratuity payable under
the 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 become 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 Govt. may by notification
specify. The interest will not 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 the ground.

Payment of Gratuity

It is a statutory duty of all employers to pay gratuity to their employees. Regarding the Payment
of Gratuity, legal payment of Gratuity, legal provisions are laid down under Section 4 and 7 of
the Act as follows:

(i) According to Section 4(1), the gratuity shall be payable to an employee on the termination of
his employment after he has rendered continuous service of not out less five years

(ii) According to Section 4(1), it is further mentioned that in the case of death of an 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 nominee or heir 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.

(iii) According to the section 7( 1) any person who is eligible for payment of gratuity under this
Act shall send a written application to the employer for the payment of such gratuity.

(iv) Under the Section 7(2) (3) (3A), it is laid down that it is the duty of employer to pay gratuity
to an eligible employee.

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