The Payment of Gratuity Act, 1972 mandates gratuity payments to employees who have completed a minimum of five years of continuous service with an employer. It applies to various sectors, including factories, mines, and shops with ten or more employees. Gratuity is calculated as 15 days’ wages for each year of service, with provisions for payment upon retirement, resignation, or in cases of death or disablement. The Act ensures that employees receive financial recognition for their long-term service and establishes a legal framework for gratuity payments. In the context of the Payment of Gratuity Act, the following forms are significant:
Form I: This is the application form that an employee must submit to their employer to claim gratuity upon superannuation, retirement, resignation, or other qualifying events. It formally requests the payment of gratuity to which the employee is entitled under Section 4 of the Act.
Form N: This form is used to file an appeal with the Controlling Authority if an employer refuses to pay gratuity or delays payment beyond the stipulated time. It must be submitted within 90 days of the gratuity becoming payable.
Form R: This form is issued by the Controlling Authority after determining the gratuity amount payable to the employee. It directs the employer to make the payment accordingly.
What Are The New Gratuity Rules For 2024?
The new gratuity rules for 2024 under the Payment of Gratuity Act include significant changes aimed at restructuring employee compensation. Some changes are
Employers must ensure that at least 50% of an employee’s salary is classified as basic pay, impacting gratuity calculations.
The tax-exempt limit for gratuity payments has been raised from ₹20 lakh to ₹25 lakh, effective January 1, 2024.
Employees are eligible for gratuity after five years of service, with exceptions for death or disability.
Employees must have completed five continuous years with the same employer to qualify for gratuity.
Gratuity is payable regardless of service length if an employee dies or becomes disabled due to illness or accident.
Employees are entitled to gratuity upon retirement or superannuation.
These criteria ensure that employees receive their rightful gratuity benefits based on their service duration and circumstances of departure from employment.
How To File A Case Under The Payment Of Gratuity Act?
To file a case under the Payment of Gratuity Act, follow these steps:
Submit a formal application for gratuity payment using Form I to your employer. If you’re unable to do so, your nominee or legal heir can submit it on your behalf.
The employer must verify your service records and calculate the gratuity amount within 30 days of receiving your application. They will then issue a gratuity order or a notice of rejection.
If the employer fails to pay or rejects the claim without valid reasons, you can appeal to the appropriate authority using Form N. This authority will conduct a hearing and issue summons to both parties.
If your claim is validated, the authority will instruct the employer to pay the gratuity amount.
Ensure you maintain accurate documentation throughout this process for timely resolution.
What Are The Steps To Take If Gratuity Gets Rejected?
If your gratuity claim is rejected, follow these steps to appeal:
Use Form N to submit your appeal to the appropriate authority (usually the Controlling Authority) within 60 days of receiving the rejection notice.
Your appeal should contain your personal information, details of your employment, and reasons for contesting the rejection.
The authority will issue summons (Forms O and P) to both parties and conduct a hearing to resolve the issue.
If your claim is validated, the authority will instruct your employer to pay the gratuity (Form R).
Maintain accurate documentation throughout this process for effective resolution.
