The Payment of Gravity Act,
1972
No.39 of 1972
[21st
August, 1972]
An Act to provide for a scheme for the payment
of gratuity to employees engaged in factories, mines, oilfields,
plantations, ports, railway companies, shops or other establishments
and for matters connected therewith or incidental thereto.
Be
it enacted by Parliament in the Twenty-third Year of the Republic of
India as follows: -
1.Short title, extent,
application and commencement.- (1) This Act may be called the
Payment of Gratuity Act, 1972.
(2) It extends to the whole of
India:
Provided that in so far as it relates to plantations
or ports, it shall not extend to the State of Jammu and
Kashmir.
(3) It shall apply to-
(a) every factory,
mine, oilfield, plantation, port and railway company;
(b)
every shop or establishment within the meaning of any law for the
time being in force in relation to shops and establishments in a
State, in which ten or more persons are employed, or were employed,
on any day of the preceding twelve months;
(c) such other
establishments or class of establishments, in which ten or more
employees are employed, or were employed, on any day of the
preceding twelve months, as the Central Government may, by
notification, specify in this behalf.
(4) It shall come into
force on such date as the Central Government may, by notification,
appoint.
2.Definitions.- In this
Act, unless the context otherwise requires,-
(a) "appropriate
Government" means,-
(i) in relation to an
establishment-
(a) belonging to, or under the control of, the
Central Government,
(b) having branches in more than one
State,
(c) of a factory belonging to, or under the control
of, the Central Government,
(d) of a major port, mine,
oilfield or railway company, the Central Government,
(ii) in
any other case, the State Government;
(b) "completed year of
service" means continuous service for one year;
(c)
"continuous service" means uninterrupted service and includes
service which is interrupted by sickness, accident, leave, layoff,
strike or a lock-out or cessation of work not due to any fault of
the employee concerned, whether such interrupted or interrupted
service was rendered before or after the commencement of this
Act.
Explanation I.- In the case of an employee who is not in
uninterrupted service for one year, he shall be deemed to be in
continuous service if he has been actually employed by an employer
during the twelve months immediately preceding the year for not less
than-
(i) 190 days, if employed below the ground in a mine,
or
(ii) 240 days, in any other case, except when he is
employed in a seasonal establishment.
Explanation II.An
employee of a seasonal establishment shall be deemed to be in
continuous service if he has actually worked for not less than
seventh-five per cent of the numbers of days on which the
establishment was in operation during the year.
(d)
"controlling authority" means an authority appointed by the
appropriate Government under section 3;
(e) "employee" means
any person (other than an apprentice) employed on wages, not
exceeding one thousand rupees per mensem, in any establishment,
factory, mine, oilfield, plantation, port, railway company or shop,
to do any skilled, semi-skilled, or unskilled, manual, supervisory,
technical or clerical work, whether the terms of such employment are
express or implied, but does not include any such person who is
employed in a managerial or administrative capacity, or who holds a
civil post under the Central Government or a State Government, or
who is subject to the Air Force Act, 1950, (45 of 1950) the Army
Act, 1950, (46 of 1950) or the Navy Act, 1957 (62 of
1957).
Explanation.- In the case of an employee, who having
been employed for a period of not less than five years on wages not
exceeding one thousand rupees per mensem, is employed at any time
thereafter on wages exceeding one thousand rupees per mensem,
gratuity, in respect of the period during which such employee was
employed on wages not exceeding one thousand rupees per mensem,
shall be determined on the basis of the wages received by him during
that period;
(f) "employer" means, in relation to any
establishment, factory, mine, oilfield, plantation, port, railway
company or shop-
(i) belonging to, or under the control of,
the Central Government or a State Government, a person or authority
appointed by the appropriate Government for the supervision and
control of employees, or where no person or authority has been so
appointed, the head of the Ministry or the Department
concerned,
(ii) belonging to, or under the control of, any
local authority, the person appointed by such authority for the
supervision and control of employees or where no person has been so
appointed, the chief executive officer of the local
authority,
(iii) in any other case, the persons, who, or the
authority which, has the ultimate control over the affairs of the
establishment, factory, mine, oilfield, plantation, port, railway
company or shop, and where the said affairs are entrusted to any
other person, whether called a manager, managing director or by any
other name, such person;
(g) "factory" has the meaning
assigned to it in clause (m) of section 2 of the Factories Act, 1948
(63 of 1948);
(h) "family", in relation to an employee, shall
be deemed to consist of-
(i) in the case of a male employee,
himself, his wife, his children, whether married or unmarried, his
dependent parents and the widow and children of his predeceased son,
if any,
(ii) in the case of a female employee, herself, her
husband, her children, whether married or unmarried, her dependent
parents and the dependent parents of her husband and the widow and
children of her predeceased son, if any :
Provided that if a
female employee, by a notice in writing to the controlling
authority, expresses her desire to exclude her husband from her
family, the husband and his dependent parents shall not longer be
deemed, for the purposes of this Act, to be included in the family
of such female employee unless the said notice is subsequently
withdrawn by such female employee.
Explanation.- Where the
personal law of an employee permits the adoption by him of a child,
any child lawfully adopted by him shall be deemed to be included in
his family, and where a child of an employee has been adopted by
another person and such adoption is, under the personal law of the
person making such adoption, lawful, such child shall be deemed to
be excluded from the family of the employee;
(i) "major port"
has the meaning assigned to it in clause (8) of section 3 of the
Indian Ports Act, 1908 (15 of 1908);
(j) "mine" has the
meaning assigned to it in clause (j) of sub-section (1) of section 2
of the Mines Act, 1952 (35 of 1952);
(k) "notification" means
a notification published in the Official Gazette;
(l)
"oilfield" has the meaning assigned to it in clause (e) of section 3
of the Oilfields (Regulation and Development) Act, 1948 (53 of
1948);
(m) "plantation" has the meaning assigned to in clause
(f) of section 2 of the Plantations Labour Act, 1951 (69 of
1951);
(n) "port" has the meaning assigned to it in clause
(4) of section 3 of the Indian Ports Act, 1908 (15 of
1908);
(o) "prescribed" means prescribed by rules made under
this Act;
(p) "railway company" has the meaning assigned to
it in clause (5) of section 3 of the Indian Railways Act, 1890 (9 of
1890);
(q) "retirement" means termination of the service of
an employee otherwise than on superannuation;
(r)
"superannuation", in relation to an employee, means,-
(i) the
attainment by the employee of such age as is fixed in the contract
or conditions of service as the age on the attainment of which the
employee shall vacate the employment; and
(ii) in any other
case, the attainment by the employee of the age of fifty-eight
years;
(s) "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 but does not include
any bonus, commission, house rent allowance, overtime wages and any
other allowance.
3.Controlling authority.-
The appropriate Government may, by notification, appoint any officer
to be a controlling authority, who shall be responsible for the
administration of this Act and different controlling authorities may
be appointed for different areas.
4.Payment of gratuity.- (1)
Gratuity shall be payable to an employee on the termination of his
employment after he has rendered continuous service for not less
than five years,-
(a) on his superannuation, or
(b) on
his retirement or resignation, or
(c) on his death or
disablement due to accident or disease;
Provided that the
completion of continuous service of five years shall not be
necessary where the termination of the employment of any employee is
due to death or disablement :
Provided further that in the
case of death of the employee, gratuity payable to him shall be paid
to his nominee or, if no nomination has been made, to the
heirs.
Explanation.- For the purposes of this section,
disablement means such disablement as incapacitates an employee for
the work which he was capable of performing before the accident or
disease resulting in such disablement.
(2) For every
completed year of service or part thereof in excess of six months,
the employer shall pay gratuity to an employee at the rate of
fifteen days' wages based on the rate of wages last drawn by the
employee concerned :
Provided that in the case of piece-rated
employee, daily wages shall be computed on the average of the total
wages received by him for a period of three months immediately
preceding the termination of his employment, and, for this purpose,
the wages paid for any overtime work shall not be taken into account
:
Provided further that in the case of an employee employed
in a seasonal establishment, the employer shall pay the gratuity at
the rate of seven days' wages for each season.
(3) The amount
of gratuity payable to an employee shall not exceed twenty months'
wages.
(4) For the purpose of computing the gratuity payable
to an employee who is employed, after his disablement, on reduced
wages, his wages for the period preceding his disablement shall be
taken to be the wages received by him during that period, and his
wages for the period subsequent to his disablement shall be taken to
be the wages as so reduced.
(5) Nothing in this section shall
affect the right of an employee to receive better terms of gratuity
under any award or agreement or contract with the
employer.
(6) Notwithstanding anything contained in
sub-section (1),-
(a) the gratuity of an employee, whose
services have been terminated for any act, wilful omission or
negligence causing any damage or loss to, or destruction of,
property belonging to the employer, shall be forfeited to the extent
of the damage or loss so caused;
(b) the gratuity payable to
an employee shall be wholly forfeited,-
(i) if the services
of such employee have been terminated for his riotous or disorderly
conduct or any other act of violence on his part, or
(ii) if
the services of such employee have been terminated for any act which
constitutes an offence involving moral turpitude, provided that such
offence is committed by him in the course of his employment.
Comment: "The right to
gratuity is also a statutory right. The appellant was not charged
with nor was given an opportunity that his gratuity would be
withheld as a @page-SC1927 measure of punishment. No provision of
law has been brought to our notice under which, the. President is
empowered to withhold gratuity as well, after his retirement as a
measure of punishment. Therefore, the order to withhold the gratuity
as a measure of penalty is obviously illegal and is devoid of
jurisdiction.": D.V. Kapoor v. Union of India
AIR 1990 SUPREME COURT 1923
5.Power to exempt.- The
appropriate Government may, by notification, and subject to such
conditions as may be specified in the notification, exempt any
establishment, factory, mine, oilfield, plantation, port, railway
company or shop to which this Act applies from the operation of the
provisions of this Act, if, in the opinion of the appropriate
Government, the employees in such establishment, factory, mine,
oilfield, plantation, port, railway company or shop are in receipt
of gratuity or pensionary benefits not less favourable than the
benefits conferred under this Act.
6.Nomination.- (1) Each
employee, who has completed one year of service, shall make, within
such time, in such form and in such manner, as may be prescribed,
nomination for the purpose of the second proviso to sub-section (1)
of section 4
(2) An employee may, in his nomination,
distribute the amount of gratuity payable to him under this Act
amongst more than one nominee.
(3) If an employee has a
family at the time of making a nomination, the nomination shall be
made in favour of one or more members of his family, and any
nomination made by such employee in favour of a person who is not a
member of his family shall be void.
(4) If at the time of
making a nomination the employee has no family, the nomination may
be made in favour of any person or persons but if the employee
subsequently acquires a family, such nomination shall forthwith
become invalid and the employee shall make, within such time as may
be prescribed, a fresh nomination in favour of one or more members
of his family.
(5) A nomination may, subject to the
provisions of sub-section (3) and (4), be modified by an employee at
any time, after giving to his employer a written notice in such form
and in such manner as may be prescribed, of his intention to do
so.
(6) If a nominee predeceases the employee, the interest
of the nominee shall revert to the employee who shall make a fresh
nomination, in the prescribed form, in respect of such
interest.
(7) Every nomination, fresh nomination or
alteration of nomination, as the case may be, shall be sent by the
employee to his employer, who shall keep the same in his safe
custody.
7.Determination of the amount
of gratuity.- (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 the employer,
within such time and in such form, as may be prescribed, for payment
of such gratuity.
(2) As soon as 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 determined.
(3) The employee shall
arrange to pay the amount of gratuity, within such time as may be
prescribed, to the person to whom the gratuity is
payable.
(4) (a) If there is any dispute as to the amount of
gratuity payable to an employee under this Act or as the
admissibility of any claim of, or in relation to, an employee for
payment of gratuity, or as to the person entitled to receive the
gratuity, the employer shall deposit with the controlling authority
such amount as he admits to be payable by him as
gratuity.
Explanation.- Where there is a dispute with regard
to any matter specified in this clause the employee may make an
application to the controlling authority for taking such action as
is specified in clause (b).
(b) The controlling authority
shall, after due inquiry and after giving the parties to the dispute
a reasonable opportunity of being heard, determine the amount of
gratuity payable to an employee, and, if as a result of such inquiry
any amount in excess of the amount deposited by the employer is
found to be payable, the controlling authority shall direct the
employer to pay such amount as is in excess of the amount deposited
by him.
(c) The controlling authority shall pay the amount
deposited including the excess amount, if any, deposited by the
employer, to the person entitled thereto.
(d) as soon as may
be after a deposit is made under clause (a), the controlling
authority shall pay the amount of the deposit-
(i) to the
applicant where he is the employee; or
(ii) where the
applicant is not the employee, to the nominee or heir of the
employee if the controlling authority is satisfied that there is no
dispute as to the right of the applicant to receive the amount of
gratuity.
(5) For the purpose of conducting an inquiry under
sub-section (4), the controlling authority shall have the same
powers as are vested in a court, while trying a suit, under the Code
of Civil Procedure, 1908, (5 of 1908) in respect of the following
matters, namely :-
(a) enforcing the attendance of any person
or examining him on oath;
(b) requiring the discovery and
production of documents;
(c) receiving evidence on
affidavits;
(d) issuing commission for the examination of
witnesses.
(6) Any inquiry under this section shall be a
judicial proceeding within the meaning of sections 193 and 228, and
for the purpose of section 196, of the Indian Penal Code (45 of
1860).
(7) Any person aggrieved by an order under sub-section
(4) may, within sixty days from the date of the receipt of the
order, prefer an appeal to the appropriate Government or such other
authority as may be specified by the appropriate Government in this
behalf :
Provided that the appropriate Government or the
appellate authority, as the case may be, may, if it is satisfied
that the appellant was prevented by sufficient cause from preferring
the appeal within the said period of sixty days, extend the said
period by a further period of sixty days.
(8) The appropriate
Government or the appellate authority, as the case may be, may,
after giving the parties to the appeal a reasonable opportunity of
being heard, confirm, modify or reverse the decision of the
controlling authority.
8.Recovery of gratuity.- If
the amount of gratuity payable under this Act is not paid by the
employer, within the prescribed time, to the person entitled
thereto, the controlling authority shall, on an application made to
it in this behalf by the aggrieved person, issue a certificate for
that amount to the Collector, who shall recover the same, together
with compound interest thereon at the rate of nine per cent per
annum, from the date of expiry of the prescribed time, as arrears of
land revenue and pay the same to the person entitled
thereto.
9.Penalties.- (1) Whoever,
for the purpose of avoiding any payment to be made by himself under
this Act or enabling any other person to avoid such payment,
knowingly makes or causes to be made any false statement or false
representation shall be punishable with imprisonment for a term
which may extend to six months, or with fine which may extend to one
thousand rupees, or with both.
(2) An employer who
contravenes, or makes default in complying with, any of the
provisions of this Act or any rule or order made thereunder shall be
punishable with imprisonment for a term which may extend to one
year, or with fine which may extend to one thousand rupees, or with
both :
Provided that where the offence relates to non-payment
of any gratuity payable under this Act, the employer shall be
punishable with imprisonment for a term which shall not be less than
three months unless the court trying the offence, for reasons to be
recorded by it in writing is of opinion that a lesser term of
imprisonment or the imprisonment of a fine would meet the ends of
justice.
10.Exemption
of employer from liability in certain cases.- Where an employer
is charged with an offence punishable under this Act, he shall be
entitled, upon complaint duly made by him and on giving to the
complainant not less than three clear days' notice in writing of his
intention to do so, to have nay other person whom he charges as the
actual offender brought before the court at the time appointed for
hearing the charge; and if, after the commission of the offence has
been proved, the employer proves to the satisfaction of the
court-
(a) that he has used due diligence to enforce the
execution of this Act, and
(b) that the said other person
committed the offence in question without his knowledge, consent or
connivance,
that other person shall be convicted of the
offence and shall be liable to the like punishment as if he were the
employer and the employer shall be discharged from any liability
under this Act in respect of such offence;
Provided that in
seeking to prove as aforesaid, the employer may be examined on oath
and his evidence and that of any witness whom he calls in his
support shall be subject to cross-examination on behalf of the
person he charges as the actual offender and by the prosecutor
:
Provided further that, if the person charged as the actual
offender by the employer cannot be brought before the court at the
time appointed for hearing the charge, the court shall adjourn the
hearing from time to time for a period not exceeding three months
and if by the end of the said period the person charged as the
actual offender cannot still be brought before the court, the court
shall proceed to hear the charge against the employer and shall, if
the offence be proved, convict the employer.
11.Cognizance of offences.-
(1) No court shall take cognizance of any offence punishable under
this Act save on a complaint made by or under the authority of the
appropriate Government :
Provided that where the amount of
gratuity has not been paid, or recovered, within six months from the
expiry of the prescribed time, the appropriate Government shall
authorise the controlling authority to make a complaint against the
employer, whereupon the controlling authority shall, within fifteen
days from the date of such authorisation, make such complaint to a
magistrate having jurisdiction to try the offence.
(2) No
court inferior to that of a Presidency Magistrate or a Magistrate of
the first class shall try any offence punishable under this
Act.
12.Protection of
action taken in good faith.- No suit or other legal proceeding
shall lie against the controlling authority or any other person in
respect of anything which is in good faith done or intended to be
done under this Act or any rule or order made thereunder.
13.Protection of gratuity.-
No gratuity payable under this Act shall be liable to attachment in
execution of any decree or order of any civil, revenue or criminal
court.
14.Act to
override other enactments, etc.- The provisions of this Act or
any rule made thereunder shall have effect notwithstanding anything
inconsistent therewith contained in any enactment other than this
Act or in any instrument or contract having effect by virtue of any
enactment other than this Act.
15.Power to make rules.-
(1) The appropriate Government may, by notification, make rules for
the purpose of carrying out the provisions of this Act.
(2)
Every rule made by the Central Government under this Act shall be
laid, as soon as may be after it is made, before each House of
Parliament while it is in session, for a total period of thirty days
which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both
Houses agree in making any modification in the rule or both Houses
agree that the rule should not be made, the rule shall, thereafter,
have effect only in such modified form or be of no effect, as the
case may be; so, however, that any such modification or annulment
shall be without prejudice to the validity of anything previously
done under that rule.