The Payment of Gratuity Act, 1972 is an Indian law that makes certain industries pay a one-time gratuity to retired employees. The law applies to railways, ports, factories, oilfields, plantations, mines and shops.
The gratuity is 15 days’ wages for every year of employee service, or partial year over six months.
“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 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, or managing director or by any other name, such person.
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 orders, 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.
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:
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:
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.
Payment of Gratuity:
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,
(c) On his death or disablement due to accident or disease.