BBA–MBA Integrated Programme

Advanced Course on OB & HRM

Individual Assignment
Submitted by
Adit Sanghvi

187104

Submitted to
Prof. Poonam Chhaniwal
 Acknowledgement:-
I would like to pay my sincere gratitude to the Institute of Management at Nirma University for
introducing this course in our curriculum. Exploring the implications and the practical aspects of
what we study inside classrooms has given a huge perspective. I would also like to thank our
Professor Poonam Chhaniwal whole heartedly for clearing our problems and helping us
alongside with this assignment.

Adit Sanghvi

187104

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 Table of Content

Sr. No. Topic Page No.

1 Overview of Payment of Gratuity Act, 1972 3

2 Amendments In Payment of Gratuity Act, 1972 9

3 Some recent judgements in Payment of Gratuity Act, 1972 10

4 Overview of The Employees Provident Fund Act, 1952 12

5 Amendments In The Employees Provident Fund Act, 1952 15

6 Some recent judgements in The Employees Provident Fund Act, 1952 16

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 Payment of Gratuity Act, 1972

 Overview:
Payment of Gratuity Act, 1972 is an act enacted by the parliament in the Twenty-Third year
of the Republic of India. It was An Act to establish a mechanism for the payment of
gratuities to workers in factories, mines, oilfields, plantations, ports, railway companies, and
retail establishments. The main aim of implementing this Act was to offer social security to
workers once they retire, whether due to superannuation, physical disability, or impairment
of a crucial bodily part. As a result, the Payment of Gratuity Act of 1972 is a significant piece
of social security legislation for workers in industries, factories, and establishments.
This Act was extended to whole India provided that in so far as it relates to plantations or
ports, it shall not extend to the State of Jammu and Kashmir.
This law applied to:
a) every factory, mine, oilfield, plantation, port and railway company
b) any business or establishment, as defined by any law in force with relation to shops and
establishments in a State, in which ten or more people are employed, or were employed,
on any day in the previous twelve months
c) Other establishments or classes of establishments in which ten or more employees are
hired, or were employed, on any day during the preceding twelve months, as the Central
Government may define by notification.
(A business or establishment that has become subject to this Act will continue to be
governed by it even if the number of people employed there falls below 10 at any time
after it has become so applicable.)

By notification, the competent Government may appoint any official as a controlling

authority responsible for the administration of this Act, with separate controlling authorities
being established for different areas.

Gratuity is paid to an employee who has worked for the company for at least five years and
is terminated for one of the following reasons: (a) superannuation, (b) retirement or
resignation, or (c) death or disability due to accident or disease.

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The employer shall provide a gratuity to an employee at the rate of fifteen days wages for
each completed year of service or part thereof in excess of six months, depending on the rate
of wages last drawn by the employee concerned.

The maximum amount of gratuity payable to an employee is three lakhs and fifty thousand
rupees.

For the purposes of calculating the gratuity due to an employee who is employed on reduced
wages following his disablement, his wages for the period preceding his disablement are
taken to be the wages received during that period, and his wages for the period following his
disablement are taken to be the wages as reduced.

Nothing in this section affects an employee's right to favorable gratuity terms under any
award, agreement, or contract with the employer.

Notwithstanding anything in subsection (1),

(a) the gratuity of an employee whose services have been terminated for any act, willful
omission, or negligence resulting in any damage or loss to, or destruction of, employer
property must be forfeited to the extent of the damage or loss.

(b) an employee's gratuity may be forfeited whole or partially]

i) if such employee's employment has been terminated due to his rioting or disorderly
behaviour or any other act of violence, or if such employee's employment has been
terminated due to his riotous or disorderly conduct or any other act of violence, or

ii) if such employee's employment has been terminated for any act that constitutes a crime
misdemeanors, provided that such act was done while he was employed.

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Act on Insurance of Employees:

1. Subject to the provisions of sub-section (2), every employer, other than an employer or an
establishment belonging to, or under the control of, the Central Government or a State
Government, shall obtain insurance from the Life Insurance Corporation of India or any other
prescribed insurer for his liability for payment of the gratuity under this Act in the manner
prescribed.
2. Exemption may be granted to any company with 500 or more employees who establishes an
approved gratuity fund in the manner specified by sub-section (1). Every employer who has
already established a gratuity fund may be exempted by the competent government,
according to the requirements that may be stipulated.
3. Every employer must register his or her business with the controlling body in the appropriate
manner within the timeframe. No employer may register under the terms of this section
unless he has purchased the insurance described in subsection (1) or established an approved
gratuity fund, in addition to purchasing insurance and establishing a gratuity fund.
4. Employees of the Life Insurance Corporation of India or any other insurer with whom an
insurance policy has been taken out under sub-section (1), or the Board of Trustees of the
approved gratuity fund, as the case may be. To give effect to the provisions of this section,
the government may make rules that specify the membership of the board of trustees of the
agreed gratuity fund and the recovery of the amount of the gratuity payable to an employee
from the trustee's company.
5. If an employer fails to pay the amount of gratuity due under this Act (including any interest
payable for late payments), he will be accountable to the regulating authority for that amount.
6. An offence punishable by a fine of up to ten thousand rupees and, in the case of a continuing
crime, a further fine of one thousand rupees for each day the offence continues is punishable
by a fine of up to 25,000 rupees a day.

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Act on Nomination of Gratuity:

1. Each employee who has completed one year of service shall make a nomination for the
purpose of the second proviso to sub-section(1) of section 4 within such time, in such
form, and in such manner as may be prescribed.
2. In his nomination, an employee may distribute the amount of gratuity due to him under
this Act among multiple nominees.
3. If an employee has a family at the time of the nomination, the nomination must be made
in favor of one or more members of the employee's family, and any nomination made in
favor of a person who is not a member of the employee's family is void.
4. If the employee has no family at the time of nomination, the nomination may be made in
favor of any person or persons; however, if the employee later acquires a family, the
nomination shall immediately become invalid, and the employee shall make a new
nomination in favor of one or more members of his family within such time as may be
prescribed.
5. An employee may modify a nomination at any time, subject to the provisions of sub-
sections(3) and(4), after providing his employer written notice of his intention to do so in
the form and manner provided.
6. If a nominee dies before the employee, the employee's interest in the nominee's interest
reverts to the employee, who must submit a new nomination in the specified manner.
7. Every nomination, whether it is a new nomination or an alteration of an existing
nomination, must be given by the employee to his or her employer, who must maintain it
in his or her secure custody.

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Act on Determining the Gratuity Amount:

1. A person who is entitled to gratuity under this Act, or any person authorised to act on his
behalf in writing, must submit a formal application to the employer. The employer will be
compelled to pay such gratuity within such time and in such form as may be prescribed.
2. Whether or not an application referred to in sub-section (1) has been made, the employer
shall determine the amount of gratuity and give notification in writing to the person to
whom the gratuity is payable, as well as the controlling authority, detailing the amount
gratuity so determined. The employer shall notify that person and the controlling
authorities in writing, stating the amount of gratuity determined.
3. The employer must make arrangements to pay the gratuity to the individual to whom it is
due within thirty days of the date it becomes due.
a. The Central Government may pay simple interest at a rate not to exceed the rate
specified in the Central Government's notification for the repayment of long-term
deposits from time to time. If the employer fails to pay the amount of gratuity due
under subsection (3) within the time period stated in subsection (3), the employer
must pay from the date the gratuity becomes due to the date it is paid.
4.
a. If there is a disagreement about the amount of gratuity payable to an employee
under this Act, the admissibility of any claim by or on behalf of an employee for
gratuity payment, or the person entitled to receive the gratuity, the employer shall
deposit with the controlling authority the amount he admits to be payable as
gratuity. According to the Act, an employee's employer shall deposit with the
governing authorities any money that he accepts is payable to him as gratuity.
b. When a dispute arises over any of the items listed in clause (a), the employer,
employee, or any other person who raises the issue may file a complaint with the
regulating authority for resolution.
c. The controlling authority shall determine the matter or matters in dispute after due
inquiry and after giving the parties to the dispute a reasonable opportunity to be
heard, and if any amount is found to be payable to the employee as a result of
such inquiry, the controlling authority shall direct the employer to pay such

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 amount or, as the case may be, such amount less the amount already deposited by
the employer.
d. The regulating authority shall pay the sum deposited to the individual entitled to
it, including any excess amount paid by the employer, if any.
5. The controlling authority shall have the same powers as a court, while trying a suit, under
the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters: (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
commissions for the examination of witnesses.
Act on Determining the Gratuity Amount:
 If the employer fails to pay, he will be sentenced to 6 months in prison or a fine of Rs
1000, or both.
 If an employer fails to comply with the act's terms, he may be sentenced to three months
to one year in prison or a fine of Rs 10,000 to Rs 20,000, or both.
 If the offence is related to the failure to pay any gratuity due under the Act, the employer
faces a penalty of 6 months to 2 years in prison.
Under this Act, no judicial procedures or penalties can be imposed unless the proper
government or regulating authority files a complaint. If the gratuity is not paid within 6
months of the due date, the government may direct the regulating authority to file a
complaint against the employer. After that, the regulating authority has 15 days to register a
complaint.

Problems with the Payment of Gratuity Act, 1972:

 The upper ceiling Gratuity amount under the Payment of Gratuity Act, 1972 is only ₹3.5
Lakh which has constituted a huge problem for more loyal employees. This ceiling was
changed to ₹10 Lakhs in the year 2010.
 Another big problem for Female employees was the concept of maternity leave which
was only of 12 weeks in earlier Amendments.

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 Several Amendments made to Payment of Gratuity Act, 1972 for
overcoming the problems:
 The maximum amount of gratuity payout has been deferred as a result of the Act's
revision. The gratuity limit of INR 10 Lakhs, which was imposed in 2010 by an Act
amendment, has been abolished. The Act was changed to accommodate the
implementation of the Seventh Central Pay Commission (7th Pay Commission). As a
result, the gratuity ceiling for Central Government employees has been raised from INR
10 Lakhs to INR 20 Lakhs.
 It should be noted that the Act states that if the terms and conditions of an employment
contract provide for a higher amount as a gratuity than the Act's ceiling limit, then the
employee is entitled to that amount which was earlier neglected.
 Previously, the Act stipulated a 12-week maternity leave term for women in continuous
employment. In order to stay up with the recently changed Maternity Benefits Act, the
amendment was modified in such a way that the maternity leave term was extended to 26
weeks from 12 weeks.
 An amendment was proposed to ensure that employees in the private sector and
government-owned public sector undertakings/autonomous institutions who are not
covered by the CCS (Pension) Rules work in harmony. Such personnel would be entitled
to larger gratuity payments, on par with their government counterparts.

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 Recent Judgments involving Payment of Gratuity Act:
1. Avinash Sharma vs Tata Power Delhi Distribution Ltd on 8 November, 2021

Mr. Pushkarna's reliance on the Supreme Court's decision in North Delhi Power Ltd.
(supra) to argue that the employer is responsible for the pension and medical benefits is
likely to be rejected, because the issue in that case was whether the holding company or
its subsidiary was responsible for the pension. The petitioner has 20 years of qualifying
service for pension purposes; the question now is whether he is entitled to medical
benefits as a retiree. In accordance with the Rules, the respondents will determine this
issue in conjunction with one another.
2. Jogu Bikshapathi And 71 Others vs The State Of Telangana And 14 ... on 5 November,
2021
"The government has been considering raising the superannuation age for government
employees for some time, for reasons such as increased life expectancy, health issues,
and late entry into government service due to an increase in the qualifying age. As a
result, the matter was sent to the First Telangana Pay Revision Commission for review. In
its report, the Pay Revision Commission suggested that the retirement age be increased
from 58 to 60 years. After further consultation with various Employees and Service
Associations and a thorough examination of all relevant factors, the Government has
decided that it would be appropriate to raise the age of superannuation for all State
Government employees whose age of superannuation is currently 58 or 60 years to 61
years by amending the Telangana Public Employment (Regulation of Age of
Superannuation) Act. It has also been maintained that in the topic of granting a higher
pay scale, City Compensatory Allowance, Consolidated Pay and Family Pension,
enhancement of gratuity, increased quantum of pension, contributory pension plan, and
expansion of medical facilities, among other things.

3. Manoranjan Mohanty vs . M/S Orbet Researcher Associate ... on 26 October, 2021

The employee respondents were not authorised to apply for payment of the gratuity under
section 33-C(2) of the Industrial Disputes Act, 1947, and should have instead applied
under the terms of the Payment of Gratuity Act, if at all. It is argued that the Payment of
Gratuity Act is a self-contained code that contains all of the fundamental provisions

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 relating to gratuity payment that can be claimed under that Act, and that its provisions
imply that referral to any other statute for that purpose is unnecessary. The argument is
valid and must be accepted. A comprehensive examination of the essential clauses of the
Payment of Gratuity Act reveals that Parliament has adopted a well-coordinated
framework for gratuity payment. The competent Government appoints a controlling
authority under section 3, and Parliament has made him responsible for the entire Act's
administration.
4. Ajit Kumar Pande, Ex-Member (JUDICIAL) RCT vs Union Of India, Through
Chairman ... on 4 October, 2021
A.K. Pandey's appointment was controlled by the Ministry of Railways' Notification of
September 10, 1989, which notified the Railway Claims Tribunal (Salaries and
Allowances and Conditions of Services of Chairman, Vice-Chairman, and Members)
Rules, 1989 ('Rules of 1989', for short). He stated that because the subject of gratuity is
currently before the Supreme Court, he will not be praying for the claim. In light of the
aforementioned judgments, he also stated that on April 20, 2020, he made a request to the
Hon'ble Chairman of the RCT, Principal Bench, praying for two reliefs: first, his
entitlement to gratuity under the provisions of the Payment of Gratuity Act, 1972, and
second, calculation of pension after taking into account 10 years of practise at the Bar.
5. Supreme Court Judgment on Payment of Gratuity Act 1972 (30/04/2020)
The respondent began working for the appellant in the year 2000 and retired in 2012,
after which the appellant granted him a gratuity of Rs 10 Lakhs. The respondent, on the
other hand, claimed to be entitled to a gratuity of Rs. 1,83,75,000. When the respondent
resigned from the appellant company, the ceiling limit under Section 4(3) was set at "10
Lakh rupees," and there was no higher limit for an employee to be covered under Section
2 (e) of the Act, according to the Supreme Court.

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 The Employees Provident Fund Act, 1952
 Overview:
Employees Provident Fund was formed in 1952, and the Employees Provident Fund &
Miscellaneous Provisions Act, 1952, covers the entire country excluding Jammu and
Kashmir. A provident fund is a welfare programme for employees' benefit. Both the
employee and the employer contribute to this plan, however the employer is responsible for
the entire amount. The employee's part of the salary was deducted by the employer. The
interest earned on this investment is credited to the employees' pf accounts. If specific
requirements are met, the accumulated sum is distributed to the employees at the time of
retirement.
The Employees Provident Fund Act was enacted to give financial security and stability to
people after they retire or are no longer physically capable of working and earning. A
statutory organization, the Employee Provident Fund Organization, will be constituted under
the Ministry of Labour and Employment Industry to administer this act.
This statute includes provisions for Provident Funds, Pension Funds, and Deposit-Linked
Insurance Funds. This act applies to any factory or establishment with 20 or more employees
(applicable to every industry listed in Schedule 1 of this act), any factory or establishment
with less than 20 employees and a two-month notice from the Central Government, any
establishment where the employer and majority of employees apply for this act's
applicability, and municipal councils and corporations. EPF is available to all paid
employees, although it is mandatory for employees earning less than $15,000 per month to
enroll in the plan.
Employees include everyone who works for an establishment in whatever capacity, receives
wages directly or indirectly from the employer, is hired through a contractor, is assigned as
an apprentice, and so on.
Following 3 schemes were incorporate under this Act:
I. Employee’s Deposit Linked Insurance Scheme: Aimimg to provide Life insurance
benefits to employees.
II. Employee’s Provident Fund Scheme: Promoting retirement Savings among the
Employees.

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 III. Employee’s Pension Fund Scheme: Providing post retirement pensions to the
employees.
Contribution of Employer And Employee In Schemes:
EDLIS EPS EPF
Employer 0.5 % 8.33% 12% (10% being
employee cont.)
Employee 0% 0% 3.67%

For the purposes of calculation, the maximum basic wage limit is Rs 15,000 per month. An
employee might voluntarily enhance his or her contribution to the provident fund by submitting a
joint request from the employee and the company.
Rules for Withdrawing the PF amount:
When an employee retires from employment, retires due to permanent incapacity, retires under a
voluntary retirement scheme, permanently migrates from India to settle abroad, female
employees leave due to marriage, or remains unemployed for a period of two months or more, he
or she is eligible to fully withdraw his or her EPF. In EPF, an employee can name a nominee
who will receive the funds if in case She/he passes away. Employees can nominate their mother,
father, spouse, and children, but they cannot nominate their brother or sister.
The ability of an employee's PF account to be moved to another establishment if the employee
changes jobs is one of the most important aspects and benefits of this statute. The employee can
partially withdraw the EPF under specified circumstances, such as marriage, schooling,
land/house acquisition, home loan repayment, house renovation, and so on. Furthermore, when
an employee reaches the age of 57, he can withdraw 90% of his accrued balance plus interest.
Employer Responsibility:

The following are the responsibilities of the employer:

i. They must file monthly EPFO returns within 15 days of the end of the month.

ii. Prepare and submit to EPFO a list of employees who were newly hired during the previous
month and are eligible to join this fund.

iii. Compile a list of personnel who have departed the company in the past month.

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Tax Benefits:

The employer's contribution to the EPF is tax-free. The employee's contribution is tax-free as
well. All EPF transactions, including the money invested by the employee, the interest earned,
and the money withdrawn, are tax-free.

Problems Faced by the enforcers:

 The employee contribution of 10% was a bit too much burden for the employees especially
female employees
 The administration charge for the PF account was a bit too much for the employers.
 Fewer schemes were recognized by the Government in exchange of EPF.
 During Covid time, employees were not able to sustain their standard of living due to
increased health expenditure and being not able to withdraw from Provident Fund account.

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 Several Amendments made to The Employees Provident Fund Act, 1952
for overcoming the problems:
 In 2019 it was announced that, Employees can choose to participate in the
National Pension Scheme instead of receiving pension benefits under the
EPF Act. Employers would also face larger monetary penalties if they fail to
comply with the EPF Act's obligations, according to the announcement.
 To encourage more women to work in the formal sector, the Union Budget
2018 declared that female employees will contribute 8% to the EPF instead
of the usual 12 percent, which will be offered to new female employees for
the first three years of their employment. As part of the Aatma Nirbhar
Bharat initiative, Finance Minister Nirmala Sitharaman announced that both
employees and employers' contributions to the Employees' Provident Fund
(EPF) will be reduced to 10%, allowing employees to withdraw more money
monthly while simultaneously providing relief to employers.
 The administrative charge for the provident fund, which was paid by the
employer, was cut to 0.50 percent from 0.65 percent on June 1, 2018.
 Government also allowed EPF members to withdraw their Basic Pay +
Dearness Allowance for three months or 75 percent of their PF money,
whichever is lower due to Covid-19 pandemic.

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 Recent Judgments involving The Employees Provident Fund Act, 1952:
1. Mitesh Kumar J Sha vs The State Of Karnataka on 26 October, 2021
A person who deducts the employee's contribution from the wages payable to the
employee for credit to a Provident Fund or Family Pension Fund established by any law
for the time being in force, whether exempted under section 17 of the Employees'
Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not, shall be
deemed to have been entrusted with the amount of the contribution so deducted, and if he
makes deductions, he must pay such contribution without any failure. In case of failure to
pay the money, it shall be considered as the violation of the law and the person
responsible shall be deemed to have used the contributed amount dishonestly in violation
of the above law. This was the case with Appellant Mr. Mitesh Kumar J Sha. A person
who, as an employer, deducts the employee's contribution from the wages payable to the
employee for credit to the Employees' State Insurance Fund held and administered by the
Employees' State Insurance Corporation established under the Employees' State
Insurance Act, 1948 (34 of 1948), is deemed to have been entrusted with the amount of
the contribution so deducted, and if he fails to pay such contribution to the said Fund in
violation of the law.
2. M/S Mars Dial Net Private Limited vs The Union Of India on 8 October, 2021
The Employees Provident Funds And Miscellaneous Provisions Act, 1952 (hereinafter
referred to as the "Act, 1952") governs the entire mechanism of employer and employee
registration with the Employees Provident Fund Organization, payment of contributions
by the employer, payment of employer's contribution, maintenance of funds,
determination and assessment of liabilities of a particular employer, and protection and
safety of the employee's interest in term insurance. According to the petitioners, they
have an Employees Provident Fund code with the Employees Provident Fund
Organization in Patna.
3. Alok Kumar Agarwal vs Union Of India & Ors. on 20 September, 2021
Mr. Alok Kumar Agarwal started as a Deputy Chief Engineer at the Centre for Railway
Information System (hereafter "CRIS") in November 1990 and departed as Manager in
January 1996. (Technical Services). When the Petitioner started working at CRIS, he
opened an EPF account. Following that, on February 1, 1996, the Petitioner began

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 working as a Manager for Business Standard Limited (BSL) in New Delhi (Systems). At
the age of 57, the Petitioner resigned from his position as Chief Operating Officer (COO)
at BSL in October 2014. The Petitioner made his final contribution to his EPF account on
October 31, 2014. From December 2017 onwards, the Petitioner's EPF account is said to
have been inactive. Following that, on the 18th of December 2018, the Petitioner filed a
claim in Form 19 for final withdrawal of the complete EPF accumulation after
discovering that he had not been paid interest for the time beyond November of 2017.
The Respondent Authority credited the total value of Rs.1,40,87,869/- into the
Petitioner's account on December 21, 2018, and interest was permitted for 36 months
following the Petitioner's retirement, i.e., up to November, when settling the claim. As a
result, the Petitioner requested interest for the period from December 1, 2017 to
December 28, 2018.
4. Delhi Transport Corporation vs The Regional Provident Fund ... on 20 September,
2021
The EPFO would be liable to pay interest to the Petitioner, in terms of Section 7Q of the
Employee Provident Fund and Miscellaneous Provisions Act, 1952, on the amount
calculated in terms of the Employees' Pension Scheme, if the reason for non-payment of
monthly pension is completely unjustified and devoid of any logical reasoning. As a
result, by the end of this month, together with the sum of Rs. 96,140/-, interest calculated
in accordance with applicable Rules will be credited to the Petitioner.
5. Association of Industries And Institutions vs Union Of Inida & Anr. on 17
September, 2021
It's pertinent to note that, under the EPF Act, an Electronic Challan-cum-Receipt
(hereafter "ECR") is generated whenever a deposit is made in the name of any employee.
The ECR serves as proof of the provident fund's deposit (hereinafter, "PF"). The
Petitioners argue that if the ECR is not generated, the employer will be subject to
numerous fines and will face the repercussions of non-deposit of dues. The contested
circular, dated June 1, 2021, stated that no PF deposit could be made or accepted until
Aadhaar numbers were seeded with UAN. As a result, seeding of Aadhaar numbers has
become a requirement for obtaining an ECR. The Petitioner-Association made a
representation to the Ministry of Labour & Employment, Government of India, in

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response to the impugned notification, citing the various challenges faced by employers
as a result of mandated seeding. It told the Ministry that, while both employers and
employees wish to carry out the seeding, there are a lot of technological challenges that
are preventing this from happening for a substantial number of people. As a result, the
Petitioner and its members are requesting a 3- to 4-month extension before the circular
dated June 1, 2021 is enforced.

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