To Be In Gratitude Thereof

To Be In Gratitude Thereof

- Krishna Vijay Singh

Gratuity is a retirement benefit paidas gratitude by the employer to hisemployee on the termination of services. Such a unique kind of protection prevalent in Indian organised sector involves payment of money in lump sum to a person who has rendered more than five years of continuous service to the employer. Gratuity is given the force of law by the Payment of Gratuity Act, 1972 ('Act'). The Act is applicable to all establishments including factories, mines, oilfields, plantations, ports, railway companies, shops and other establishments where numbers of employees are ten or more in any day of the preceding 12 months.

The employer is required to pay the amount of gratuity within thirty days from the date it is billed to the person to whom the gratuity is allocated. However, it is pertinent to note that the Labour Ministry has moved a proposal to increase the gratuity ceiling from INR 10 lakh to INR 20 lakh by amending the Payment of Gratuity Act, 1972. Gratuity limit for the Central Government employees has already been increased to INR 20 lakh after the implementation of the Seventh Pay Commission in 2016. However, there was no change in gratuity limit for private sector employees which is still at INR 10 lakh and the Central Government, therefore, is considering the amendment.

The Act also makes a provision for forfeiture of gratuity, wholly or in part, on termination of the services by the employer for any act or wilful omission or negligence that has caused any damage or loss to the employer's property. The employer can also forfeit gratuity, if an employee indulges in any riotous or disorderly conduct or other act of violence, or for moral turpitude in the course of employment and the employer has terminated his services on account of the same.