Page 265 - DMGT516_LABOUR_LEGISLATIONS

Labour Legislations

Notes 2. Wages 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.
Every employee irrespective of his wages is entitled to receive gratuity after he has rendered
continuous service for 5 years or more, at the time of termination of his services, either (i) on
superannuation, or (ii) on retirement, or (iii) on resignation, or (iv) on death or disablement due
to accident or disease. However, the condition of 5 years' continuous service is not necessary if
services are terminated due to death or disablement.

Disablement means permanent inability or incapacity of an employee to do the work, which he
was capable of doing before the accident or disease. In case of death of the employee, gratuity
payable to him is to be paid to his nominee, and if no nomination has been made, then to his
heirs.
For every completed year of service or part thereof in excess of six months, the employer has to
pay gratuity to an employee at the rate of 15 days' wages based on the rate of wages last drawn
by the concerned employee. In the case of piece-rated employee, daily wages are computed on
the average of the total wages received by him for a period of 3 months immediately preceding
the termination of his employment. For this purpose, the wages paid for any overtime work
will not be taken into account.

!
Caution

Gratuity Payable = 15 days' wages × No. of completed years of service.
Not exceeding 3, 50,000/-
In case of seasonal establishment,
Gratuity Payable = 7 days' wages × No. of seasons for which employed.
Not exceeding 3, 50,000/-
In case of monthly rated employee,

Monthly wages last drawn
15 days' wages =
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In the case of an employee employed in a seasonal establishment, and who is not so employed
throughout the year, the employer shall pay gratuity at the rate of 7 days wages for each season.

In case an employee has been employed on reduced wages after his disablement, his wages for
the period before his disablement shall be taken into account for calculating gratuity in respect
of that period and the wages so reduced shall be considered for calculating gratuity for the
period subsequent to his disablement.
The employee who has become eligible for payment of gratuity should apply in Form I or J or
K, respectively, within 30 days from the date of gratuity becoming payable. This application
should be sent to the employer either personally or through Registered A.D.

However, where the date of superannuation or retirement is known, the employee may apply
even 30 days before such date.
Besides, a legal heir may apply within one year from the date the gratuity becomes payable.
Any delayed application for payment of gratuity should also be entertained by the employer, if
there is sufficient cause for the delay.

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