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Unit 7: The Payment of Gratuity Act, 1972

Establishment: The Establishment is a term used to refer to a visible dominant group or elite Notes
holds power or authority that in the nation or organization.
Gratuity: Gratuity is a part of salary that is received by an employee from his/her employer in
gratitude for the services offered by the employee in the company.
Profits: The surplus remaining after all costs are deducted from overall revenue, and the basis
on Which tax is computed and dividend is paid.
Retirement: The period of a person's Life during which he/she is no longer working, or the
commencement of that period.

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.
Wages: A wage is remuneration paid by an employer to an employee. It may be calculated as a
fixed task based amount, or at an hourly rate, or based on an easily measured quantity of work
done.

7.9 Review Questions

1. What is the object of the Payment of Gratuity Act, 1972?
2. Which are the establishments covered under the Act?
3. Who is an employee under the Act?

4. What is the benefits payable under the Act?
5. Discuss the various provisions relating of the Payment of Gratuity Act.
6. Mr. X was an employee of Mutual Developers Limited. He retired from the company after
completing 30 years of continuous service. He applied to the company for the payment of
gratuity within the prescribed time. The company refused to pay the gratuity and contended
that due to stringent financial condition the company is unable to pay the gratuity. Mr. X
applied to the appropriate authority for the recovery of the amount of gratuity. Examine
the validity of the contention of the company and also state the provisions of law to
recover the gratuity under the Payment of Gratuity Act, 1972.
7. Write short note on Forfeiture.

8. What is settlement of claims?
9. Write brief note on penalties in Payment of Gratuity Act.
10. “An employee who has completed one year of service has to name his/her nominee in the
prescribed form.” Elucidate.
Answers: Self Assessment

1. True 2. True
3. False 4. One
5. Female 6. Retirement
7. False 8. False

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