THE PAYMENT OF GRATUITY ACT,1972

SOCIAL SECURITY
INTRODUCTION
6.1 Social Security caters to the universal human need for reassurance and support in times of unemployment, illness, disability, death and old age. The State bears the primary responsibility for developing appropriate systems for providing protection and assistance to its workforce and their families. Public support systems for social security in India have gained prominence over traditional family support in tune with the trends of urbanization and work place migrations. The dependence on social security varies as per the need and income status.
SOCIAL SECURITY LAWS
6.2 The principal social security laws enacted in India are the following:
The Employees’ State Insurance Act, 1948
The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 (Separate provident fund legislations exist for workers employed in Coal mines and tea plantations in the state of Assam and for seamen).
The Workmen’s Compensation Act, 1923
The Maternity Benefit Act, 1961
The Payment of Gratuity Act, 1972
ADMINISTRATION OF SOCIAL SECURITY ACTS
6.3 The EPF & MP Act is administered by the Government of India through the Employees' Provident Fund Organisation (EPFO). Cash benefits under the ESI Act are administered by the Central Government through the Employees State Insurance Corporation (ESIC), whereas the State Governments and Union Territory Administrations are administering medical care under the ESI Act. The Payment of Gratuity Act is administered by the Central Government in establishments under its control, establishments having branches in more than one State, major ports, mines, oil fields and the railways and by the State governments and Union Territory administrations in all other cases. This Act applies to factories and other establishments. In mines and circus industry, the provisions of the Maternity Benefit Act are being administered by the Central Government through the Chief Labour Commissioner (Central) and by the State Governments in factories, plantations and other establishments. The provisions of the Workmen’s Compensation Act are being administered exclusively by State Governments.
EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952
6.4 The object of the Act is the institution of compulsory contributory Provident Funds, Pension and Insurance for employees. Presently the following three Schemes are in operation under the Act through the Employees' Provident Fund Organisation:
Employees’ Provident Funds Scheme, 1952
Employees’ Deposit Linked Insurance Scheme, 1976
Employees' Pension Scheme, 1995
COVERAGE OF ESTABLISHMENTS AND MEMBERS
6.5
6.8
Presently, the Act is applicable to 180 specified industries/classes of establishments as is specified in Schedule I of the Act or any activity notified by the Central Government in the Official Gazette and employing 20 or more persons. As on 31st March 2003 there were 3,44,508 establishments and factories covered under the Act with a membership of 394.98 lakh under EPF Scheme both in the Exempted and Unexempted Sectors. With effect from 01.06.2001, an employee on joining the employment in a covered establishment and getting wages upto Rs.6500/- is required to become a member.
BENEFITS UNDER THE SCHEME
6.6 Partial withdrawals by way of advances are allowed to members for specified purposes. During the year 2002-2003, financial assistance was provided to the members by allowing partial withdrawals by settling 4.62 lakh such cases & disbursing an amount of Rs.1,373.73 crore. Further 18.31 lakh claims under the Act were settled and an amount of Rs.6621.34 crore was disbursed.
EMPLOYEES’ PROVIDENT FUNDS ARREARS
6.7 The Provident Fund arrears as on 31.03.2003 were of the order of Rs.1511.79 crore. The EPF Organisation launches prosecution against the defaulting employers under Section 14 of the Employees’ Provident Fund Act and prosecutes employers under Section 406/409 of the Indian Penal Code in case they deduct employees’ share of contribution but do not remit the same to the Fund. During 2002-03 arrears amounting to Rs.885.99 crores were realized.
EMPLOYEES' DEPOSIT LINKED INSURANCE SCHEME, 1976
Employees' Deposit Linked Insurance Scheme, 1976 is applicable to all factories/establishments with effect from August 1, 1976. All the employees who are members of the Employees’ Provident Fund are required to become members of this Scheme. Employers are required to pay contributions to the Insurance Fund at the rate of 0.5 per cent of pay i.e. basic wages, dearness allowance including cash value of food concession and retaining allowance, if any. During 2002-2003 a sum of Rs.158.62 crore comprising of employers’ contribution was deposited. During 2002-2003 there were 20,871 claims settled and an amount of Rs.51.99 crore was disbursed. At the end of 2002-2003, the EPFO had cumulative investments of Rs.3485.22 crore under this Scheme.
EMPLOYEES' PENSION SCHEME - 1995
Coverage
6.9 Employees' Pension Scheme, 1995 has been introduced w.e.f. 16.11.1995. With the introduction of the Pension Scheme, the erstwhile Family Pension Scheme, 1971 has ceased to operate. However, the pensioners who were drawing benefits under the erstwhile Family Pension Scheme, 1971 will continue to draw Family Pension under the Employees' Pension Scheme, 1995.
Eligibility
6.10 Members on attaining the age of 58 years and having rendered minimum ten years’ contributory service (including the membership period and with ceased Family Pension Scheme, 1971) shall qualify for superannuation Pension. Those members who serve less than 10 years shall be eligible for scheme certificate or withdrawal benefit as the case may be.
Benefits under the Scheme
6.11 Employees' Pension Scheme, 95 provides the following benefit package:
• Superannuation on attaining the age of 58 years.
• Retirement benefit
• Permanent total disablement
• Death during service
• Death after retirement/superannuation/permanent total disablement.
• Children pension
• Orphan pension.
6.12 The category-wise break up of pension claims (all benefits) settled by EPFO during the year 2002-2003 is indicated in the following Table.
CATEGORY OF CLAIMS
NO. OF CLAIMS SETTLED
Monthly Pension Benefits
356870
Life Assurance Benefit
3758
Retirement-cum-withdrawal benefit
1832052
Refunds
20013
TOTAL
2212693
Contribution to Pension Fund
6.13 The Scheme is financed by transferring 8.33% of the Provident Fund contribution from employers' share and by contribution @ 1.16% of basic wages by the Central Government. All accumulations in the ceased Family Pension Fund constitute the corpus of the Pension Fund. During the year 2002-03, Rs.4787.84 crore were received as Pension Fund contributions, out of which, Rs.4387.84 crore were collected from Employers’ Share & Rs.400 crore were contributed by the Central Government.
Pension beneficiaries
6.14 The beneficiaries of the ceased Family Pension Scheme continue to get benefits under the new Pension scheme. As on 31.03.2003, there were 7,50,657 members, 3,87,752 spouses, 2,90,916 children, 5,808 orphans and 6,537 nominees receiving pension under the scheme. Total amount disbursed among the pensioners during the year was Rs.995.89 crore through the nationalized banks and post offices.
MODERNISATION PROGRAMME - Reinventing EPFO
6.15 EPFO has its operational presence in over 260 locations throughout the country employs over 20,000 personnel and has undertaken a comprehensive Information Technology reform agenda, aimed at creating a country-wide integrated information network.
The programme designated as “Reinventing- EPF India” seeks to achieve the following:
• A unique Social Security Identification Number to be allotted to each subscriber. A separate unique number will also be given to establishments as their Business number.
• Subscriber member can go to any of the field offices, access his account and get information, i.e. “Anytime-Anywhere” service is sought to be provided
• The compliance function will be IT-enabled through a system of intelligence gathering and third party information collection.
THE EMPLOYEES’ STATE INSURANCE SCHEME
COVERAGE
6.16 The ESI Act provides for health care and cash benefit payments in the case of sickness, maternity and employment injury. The Act is applicable to non-seasonal factories using power and employing ten or more persons and non-power using factories and certain other establishments employing twenty or more persons. The Act is being implemented areas-wise in a phased manner. The ESI Scheme is operated in 678 centres situated in 29 States/Union Territories. As of now, over 78.65 lakh insured persons and about 303.73 lakh beneficiaries are covered under the Scheme. The number of factories and establishments covered by the end of the year had gone up to about 2,55,000.
ADMINISTRATION
6.17 The ESI Scheme is administered by a statutory body called the Employees’ State Insurance Corporation (ESIC) which has members representing Employers, Employees, Central and State Governments, Medical profession and the Parliament. The Union Minister for Labour is the Chairman. A Standing Committee constituted from among the members of the Corporation acts as the executive body for administration of the Scheme and is chaired by the Additional Secretary to the Government of India, Ministry of Labour. There are 21 Regional Boards and 358 Local Committees in existence at present. The Director General (ESIC) is the Chief Executive Officer of the Corporation and is also an ex-officio member of the
Corporation. The ESI Corporation, apart from the Headquarter Office located at Delhi, has a number of field offices throughout the country. The Corporation has 23 Regional Offices, 16 Sub-Regional and Divisional Office, 625 Local Offices, 299 Inspection Offices, and 215 Pay Offices all over the country for administration of the Scheme.
FUNDING AND OPERATION OF THE SCHEME
6.18 The ESI Scheme is mainly financed by contributions from the employers and employees. The rates of the employers’ and the employees’ contribution are 4.75% and 1.75% respectively. The State Governments’ share of the expenditure on the provision of medical care is to the extent of 12.5% (1/8th within the per capita ceiling). The Corporation has prescribed a ceiling on the shareable expenditure on medical care. From 1st April 2003, the ceiling on expenditure per insured person family unit has been increased to Rs.700/- per annum and has been raised to Rs.750/- per annum w.e.f. 1.4.2004. All capital expenditure on construction of ESI hospitals, and other buildings including their maintenance is borne by the ESI Corporation.
HEALTH BENEFITS
6.19 The Scheme provides full medical facilities, from primary health care to super specialty treatment in respect of the insured persons (IPs). The medical care under the Scheme is administered by the State Governments who have the statutory responsibility in this regard except in the National Capital Region of Delhi and NOIDA area in Uttar Pradesh. The Corporation also administers directly the five Occupational Disease Centres cum General Hospitals one each at Delhi, Pune, Chennai, Kolkata and Nagda (M.P.).
ESI MEDICAL INFRASTRUCTURE (As on 31.3.2003)
Number of ESI Hospitals
142
Number of ESI Annexes
43
Number of Beds constructed in ESI Hospitals
23,856
Number of Beds in ESI Annexes
867
Number of Beds Reserved in State Govt. Hospitals.
4000
Number of Insurance Medical Practitioners (IMPs)
6812
Number of ESI Dispensaries
1447
Number of Panel Clinics
2651
ACHIEVEMENTS OF THE ESI CORPORATION FOR THE YEAR 2002-2003
ESI Scheme today provides social protection to 310 lakh beneficiaries through a large network of 142 Hospitals, 43 Annexes, 1452 Dispensaries, 2000 Clinics and 840 Local Offices etc.
During 2002-2003 the Corporation took over ESI hospitals at Hyderabad, Jaipur, Rourkela, Sahibabad, Pune, Chandigarh, Asramam, Bangalore, Ranchi, Patna and Gauhati for their development as a Model Hospitals.
The ceiling for commutation of partial disablement benefits has been raised from the existing Rs. 10,000/- to Rs.30,000/-.
Family photo-identity cards have been issued to about 70% insured persons to check misuse of medical facilities.
Over 6 lakh low paid workers drawing wages upto Rs.40/- per day have been exempted from contribution to the ESI Scheme.
The ceiling on expenditure per insured person family unit has been enhanced to Rs.750/- per annum w.e.f. 01.04.2004.
The wage ceiling for coverage under ESI Scheme has been increased from Rs.6500/- to Rs.7500/- w.e.f. 01.04.2004.
PAYMENT OF GRATUITY ACT, 1972
6.20 The Payment of Gratuity Act, 1972 applies to factories and other establishments employing ten or more persons. On completion of five years service, the employees are entitled to payment of gratuity @15 days wages for every completed year of service or part thereof in excess of six months subject to a maximum of Rs.3.50 lakh. The current maximum limit is applicable from 24.9.1997. The wage ceiling for coverage under the Act has since been removed w.e.f. 24.05.1994.
WORKMEN’S COMPENSATION ACT, 1923
6.21 The Act provides for payment of compensation to workmen and their dependants incase of injury and accident (including certain occupational disease) arising out of and in the course of employment and resulting in disablement or death. The Act applies to railway servants and persons employed in any such capacity as is specified in Schedule II of the Act. Schedule II includes persons employed in factories, mines, plantations, mechanically propelled vehicles, construction works and certain other hazardous occupations. Minimum rates of compensation for permanent total disablement and death have been fixed at Rs.90,000 and Rs.80,000 respectively. Maximum amount for death and permanent total disablement can go up to Rs.4.56 lakh and Rs.5.48 lakh respectively depending on age and wages of workmen.
MATERNITY BENEFIT ACT, 1961
6.22 The Maternity Benefit Act, 1961 regulates employment of women in certain establishments for a certain period before and after childbirth and provides for maternity and other benefits. The Act is applicable to mines, factories, circus industry, plantations, shops and establishments employing ten or more persons, except employees covered under the Employees’ State Insurance Act, 1948. It can be extended to other establishments by the State Governments. There is no wage limit for coverage under the Act.
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THE PAYMENT OF GRATUITY ACT,1972

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.
(3A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.
(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 continuous service as defined in section 2A;
(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, 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, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
Explanation : (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 office of the local authority,
(iii) in any other case, the person, 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 dependent parents of his wife 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 :
2A. CONTINUOUS SERVICE. –
For the purposes of this Act, - (1) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing order, rules or regulations governing the employees of the establishment), lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer - (a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than - (i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and (ii) two hundred and forty days, in any other case;
(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than - (i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other case;
Explanation : For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which - (i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Order's) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned in the previous year;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.
(3) where an employee employed in a seasonal establishment, is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during such period.
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 his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.
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 a 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 who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.
Explanation : In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.
(3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.
(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, willful 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 may be wholly or partially 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.
4A. COMPULSORY INSURANCE.
(1) With effect from such date as may be notified by the appropriate Government in this behalf, every employer, other than an employer or an establishment belonging to, or under the control of, the Central Government or a State Government, shall, subject to the provisions of sub-section (2), obtain an insurance in the manner prescribed, for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation of India established under the Life Insurance Corporation of India Act, 1956 (31 of 1956) or any other prescribed insurer : Provided that different dates may be appointed for different establishments or class of establishments or for different areas.
(2) The appropriate Government may, subject to such conditions as may be prescribed, exempt every employer who had already established an approved gratuity fund in respect of his employees and who desires to continue such arrangement, and every employer employing five hundred or more persons who establishes an approved gratuity fund in the manner prescribed from the provisions of sub-section (1).
(3) For the purpose of effectively implementing the provisions of this section, every employer shall within such time as may be prescribed get his establishment registered with the controlling authority in the prescribed manner and no employer shall be registered under the provisions of this section unless he has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred to in sub-section (2).
(4) The appropriate Government may, by notification, make rules to give effect to the provisions of this section and such rules may provide for the composition of the Board of Trustees of the approved gratuity fund and for the recovery by the controlling authority of the amount of the gratuity payable to an employee from the Life Insurance Corporation of India or any other insurer with whom an insurance has been taken under sub-section (1), or as the case may be, the Board of Trustees of the approved gratuity fund.
(5) Where an employer fails to make any payment by way of premium to the insurance referred to in sub-section (1) or by way of contribution to an approved gratuity fund referred to in sub-section (2), he shall be liable to pay the amount of gratuity due under this Act (including interest, if any, for delayed payments) forthwith to the controlling authority.
(6) Whoever contravenes the provisions of sub-section (5) shall be punishable with fine which may extend to ten thousand rupees and in the case of a continuing offence with a further fine which may extend to one thousand rupees for each day during which the offence continues.
Explanation : In this section "approved gratuity fund" shall have the same meaning as in clause (5) of section 2 of the Income-tax Act, 1961 (43 of 1961).
5. POWER TO EXEMPT. –
(1) 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.
(2) The appropriate Government may, by notification and subject to such conditions as may be specified in the notification, exempt any employee or class of employees employed in 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, such employee or class of employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act.
(3) A notification issued under sub-section (1) or sub-section (2) may be issued retrospectively a date not earlier than the date of commencement of this Act, but no such notification shall be issued so as to prejudicially affect the interests of any person.
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-sections (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 employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify : Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.
(4) (a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to 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.
(b) Where there is a dispute with regard to
7A. INSPECTORS. - (1) The appropriate Government may, by notification, appoint as many Inspectors, as it deems fit, for the purposes of this Act.
(2) The appropriate Government may, by general or special order, define the area to which the authority of an Inspector so appointed shall extend and where two or more Inspectors are appointed for the same area, also provide, by such order, for the distribution or allocation of work to be performed by them under this Act.
(3) Every Inspector shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code, 1860 (45 of 1860).
7B. POWERS OF INSPECTORS. - (1) Subject to any rules made by the appropriate Government in this behalf, an Inspector may, for the purpose of ascertaining whether any of the provisions of this Act or the conditions, if any, of any exemption granted thereunder, have been complied with, exercise all or any of the following powers, namely :- (a) require an employer to furnish such information as he may consider necessary;
(b) enter and inspect, at all reasonable hours, with such assistants (if any), being persons in the service of the Government or local or any public authority, as he thinks fit, any premises of or place in any factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, for the purpose of examining any register, record or notice or other document required to be kept or exhibited under this Act or the rules made thereunder, or otherwise kept or exhibited in relation to the employment of any person or the payment of gratuity to the employees, and require the production thereof for inspection;
(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer or any person whom he finds in such premises or place and who, he has reasonable cause to believe, is an employee employed therein;
(d) make copies of, or take extracts from, any register, record, notice or other document, as he may consider relevant, and where he has reason to believe that any offence under this Act has been committed by an employer, search and seize with such assistance as he may think fit, such register, record, notice or other document as he may consider relevant in respect of that offence;
(e) exercise such other powers as may be prescribed.
(2) Any person required to produce any register, record, notice or other document or to give any information by an Inspector under sub-section (1) shall be deemed to be legally bound to do so within the meaning of sections 175 and 176 of the Indian Penal Code 1860 (45 of 1860).
(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall so far as may be, apply to any search or seizure under this section as they apply to any search or seizure made under the authority of a warrant issued under section 94 of that Code.
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 such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto :
Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate :
Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.
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 Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act.
13. PROTECTION OF GRATUITY. - No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under section 5 shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.