D.
119
The apPpropriate Government may, upon an application
made to it by the employer and for sufficient reasons, extend
the said period of 8 months to such further period or periods
as it thinks fit. However, in any case, the
total period so
extended shall not exceed two years.
11. Recovery of bonus (Sec. 21): Where any
is due to employee by way of bonus from amouDt
his employer
under a settlement of an award or agreement, an
for the application
recovery of such an amount mnay be made to the
appropriate Government by
() the emplovee himself, or
(i) any other person authorised by the employee in
writing to act on his behalf or
(ii) in case of death of the employee, his assignees
or heirs.
If the appropriate Government is satisfied with the
amount due, it shall issue a certificate for that amount to
the collector. The collector shall proceed to recover the same
as an arrear of land revenue.
An application for the recovery of bonus shall be made
within one year from the date on which it became due to
the employee from,the eriployer. However, the delay may
be condoned if the appropriate Government is satisfied that
the applicant has sufficient cause for not making the application
within the time limit.
Questions
Small Questions
1 What is an accounting year?
2 Define availabe surplus.
3 Define allTcable surplus.
4 State the objects of the Payment of Bonus Act.
5 State the establishments to which the Payment of
Bonus Act is applicable.
6 Explain the rules regarding minimum bonus and
maximum bonus.
Big Questions
1 How,would you determine the gross profit under the
Payment of Bonus Act?
2 Explain the rules regarding the payment of bonus.
CHAPTER - IX
The Payment of Gratuity Act, 1972
Gratuity is a payment to help the employees after their
retirement and to appreciate their fathful service over a long
period. It is also a kind of retirement benefit like pension.
To ensure a uniform patern of payment of gratuity to the
employees throughout the country, the Payment of Gratuity
Act, 1972 was enacted by the Central Government. This Act
came into force on 16th September, 1972. It extends to the
whole of India. But it is not applicable to the State of Jammu
and Kashmir so far as it realtes to plantations or ports.
Objects
1 To provide for the payment of gratuity to persons
employed in factories. mines, oilfields, plantations, ports,
railway companies, shops and certain other establishements
employing 10 or more persons and for matters connected
therewith or incidental thereto.
2To ensure a uniform pattern of payment of grátuty
to the employees throughout the country.
Application of this Act
This Act is applicable to the following establishments:
Every factory, mine, oil-field, plantaiton, port and
railway company.
 D. 122
leave but not treated
D. 121 Absence from duty without
(0)
as break in service.
2 Every shop or establishment within the meaning lock out.
of any law for the time being in force in relation to shops (ii) Lay off, strike or any fault of the
and establishments in a State, in which ten or more persons Cesss ation of work not due to
(iv)
are employed, or were employed, on any day of the preceding employee.
other interruptions will affect the
twelve months. Except the above all
Such other establishments or class of establish continuity of service.
employee employed
ments, in which ten or more employees are employed, or employee (not being ancontinuous service for
Where anestablishment is not in
were employed on any of the preceding twelve months, as in a seasonal
he shall be deemed to
be in continuous
the Central Government may, by notification, specify in this of one year, during the said one
a period he has worked
behalf. service for that year if
than
exempt year for not less employed in
The appropriate Government may, however, of an employee which work
190 days in case other
of this Act, if the (0) establishment
any establishment from the application employees are underground work or in any
its
gratuity or persionary benefits received by under this Act. for less than six days
in a week; and
benefits provided
not less favourable than the other case.
(i) 240 days in any seasonal
Definitions employees employed in
In relation As regards the stated above should
1 Appropriate Government [Sec.2 (a)]: () establishments, the number of days
as
on which
number of days
to an establishment percent of the
not be less than 75
control of, the Central operation.
a belonging to, or under the the establishment was in Controlling
Government, 4 Controlling Authority [Sec.2(d)]: appropriate
one state, authority appointed. by the
b) having branches in more than autharity means an
under the control of, Government under Section 3.
of a factory belonging to, or
c) may, by notification,
the Central Government, The appropriate Government authority. He shall be
railway company, controlling
d) of a major port, mine, oil-field or Government. appoint -any officer- to be a of this Act. For different
appropriate responsible for the administration
the Central Government is the may be appointed.
() In any other case, the
State Government is the areas, different controlting authorities
Employee means any
appropriate Government. 5. Employee [Sec. 2 (e)]:
employed on wages. He
Completed Year of Service (Sec 2(b)]: It means person (other than an apprentice)
2
As. per establishment, factory. mine, oil
continuous service as defined in Section 2(A). may be employed in any
continuous company or shop to
Section2(A), an employee shall be said to be in field, plantation, port, railway
period, been in
service for a period if he has, for that to the
uninterrupted service. However, the interruptions due
following will not affect the continuity of service:
() Sickness, accident, leave.
 whether
deemed children employee,
parents, wifeestablishment. has
supervision
local authority, has and
other whichauthority.
concerned, Government
Department appointed railway Government
to other include technical be do
his any managerial express any
person,7 (ii) been belonging(ü) been controi
the
children has Act
married to of establishment.
company any skilled,
In his familyFamily in so the belonging"
by Employer or or
consist dependent and so
the the any ofthe or such
or or
clerical
suchWhere appointed, person appointed, by
predeceased whether employees a a implied.or semi
of case shall ultimateother control appropriate or any person
State
[Sec.
person. State administrative
nmarried, of toshop [Sec. rules work.
skilled
of be the ase, appointed to factory,
herself, aparents
married of or Government He
2 said the or Government, who
female deemed control the or under providing The
son, (h)]: the employees under Government 2 may or 123D.
cheif mine, ()]: holds unskilled,
her her headwhere terms
of or affairs person or
if In over by the Employer capacity.
employee, unmarried,
any. his to executive the a may
ependent
husband, such for and of
wife
consist the are
of no contraloil-field,
a post
who orcontrol his
the the person
person payment is not manyal,
caseehtrusted where for
and authority meansgovernedunderemployment But
family of affairs or Ministry th e plantation,
of be
his officer of
parents, her the or orthe employed it
widow himself, of
dependent no any supervision the supervisory,
authority authority in of does
children shall a to of
authority Central gratuity. Central
person
of for or realtion by
and male any the local port, may
the be his the the the any not
in

ofdisease. employment
less afterhe
shallPayment of bonus,andincludes The
accordance are Contract
of or,
attainment the dependent of
pleted to been to
him 5 which service the
an any
emoluments earned
2. years In (ii)hison (i) (0) than be 10
made, In Commission, predeceased
employee shall case case payable dearness
other the
on 5
onCircumstances Wages
(Sec.
Superannuation
conditions Retirement
of of parents
year Rate is y with by
it be of his his ears Gratuity (Sec. 4) employee the an
of not allowance.
shall the an
of at of paiddeath death superannuation, retirement
death to are employeesemployee
necessary. an
allowance. employee
terms of
senvice
gratuity:
the be has house-rent of son, her
to of or paid (Sec.
or employee
rendered 2(s)]: shall
service
rate paid hidisablement,
s the for and husband if
or disablement or or otherwise 124 D.
The nominee.to
employee, payment But It
while vacate [Sec.
of 2any.
part of his resignation, conditions
allowance,payable means as
such (q)
15 or
continuous on
employer
thereof it th e ]: and
heirs. the the on
days' does the 2than
It
!f due of age age the
the to duty all ()]: means
nocontinuous termination
gratuity:hisof of
employment.
wages in shall or emoluments on
nomination gratutiy to servicefor overtime not him his on as widow
excess or It
pay accident superannuation.
t he is
include
employment. in on termination
for fixedmeansthe and
gratuity payable service Gratuity cash. attainment
of
every wages leave
six has not which in children
or any
It in the
of
 D. 125
rmonths. The 15 days' wages shall be D. 126
the monthly wages last drawn. calculated by dividing
by an employee by 26 and c) When a workman is dismissed for miscondut, he
mutiplying the quotient by 15, In the case of piece-rated must be paid gratuity after deducting the amount of loss
employee daily wages shall be computed on the average of caused to the employer by his misconduct. The reason is
the total wages (excluding
overtime-wages) received by him
for a period of 3months immediately preceding the termination
that they cannot be depríved altogether of benefit of gratuty
he has earned by the past period of service (Hindustan
of his employment. Times Ltd. V. Their workmen).
In case of an employee who is not employed throughout d) Any decision to forfeit gratuity can be taken only
the year in a seasonal establishment, the employer shall pay after giving an opportunity of hearing the employee (Bharat
gratuity at the rate of7 day's wages for each season. Gold Mines Ltd. V. Regional Labour Commissioner).
3. Maximum gratuity: The amount of gratuity payable Nomination (Sec. 6)
to an employee shall not exceed Rs.3,50,000 1. Making the nomination: Each employee who has
4. Better terms of gratuity: The provisions of Section completed one year of service shall make a nomination in
4 shall not affect the right of an employee to receive better prescribed form within the prescribed period. Such
contract nomination shall be made by an employee to
terms of gratuity under any award or agreement or name the

with the employer. person to- whom the gratuity payable to him shall be paid.
2. More than one nominee: An employee may make
Forfeiture of Gratuity [Sec. 4(6)] the nomination in such manner to distribute the amount of
payable
The provisions regarding the forfeiture of gratuity gratuty -payable to him among more than one nominee.
follows :
to an employee are as 3. Nomination in favour of family members: If the
employee, whose service have
a) The gratuity of an omission or negligence
employee has a family at the time of making the nomination,
been terminated for any act, wilful destruction of property the nomination shall be made in favour of one of more
causing any damage or loss to or members of his family. If such employee makes a nomination
forfeited to the extent
belonging to the emnployer, shall be in favour of a person who is not a member of his family
caused.
of the damage or loss _o shall be void.
may be wholy
b The gratuity payable to an employeeemployee have If the employee has no family at the time of making
the services of such
or par aially forfeited if a nomination, the nomination may be made in favour of any
been terminated person or persons, But if the employee subsequently acquires
or any other a family, the nomination alreacy made on behalf of a third
for his siotous or disorderly conduct
act of violence on his part, or person shall become void. Therefore, the employee shal
make a fresh nomination in favour of one or more members
an offence invoving
(ii) for any act which constitutes of his family within the prescribed time.
offence is committed by
moral turpitude, provided that such
him in the.course of his employment. 4. Modification of nomination: A nomination inay
be modified by an employee at any time. But before such
modification, the employee shall give a written notice of his
 D. 128
to
shall pay the amount of gratuity
D. 127 it becomes payable. He
payable.
employer in the
prescribed form the person to whom it is
intention to do so to his gratuity: If the
4. Interest for delayed payment of
and in the prescribed
manner. employer is not paid within
nominee: If a nominee
predeceases the amount of gratuity payable by the amount payable.
Death of revert to the pay simple interest for the
5. nominee shall 30 days, he shall the
employee, the interest of
the shall not exceed
fresh nomination The rate of interest for this purpose
employee shall make a Central Government from time to time
employee. Then the rate notified by the
such interest. deposits. Such interest shall be
in respect of nomination: Every nomination, for repayment of long term becomes
6 Safe custody of employee to his calculated from the date on which the gratuity
be sent by the which it is paid. However, such
fresh or altered, shall same in his safe payable to the date on
the are
employer. The employer
shall keep interest need not be paid if the following conditions
satisfied.
custody.
Determnination of Gratuity
(Sec.7) The dalay in payment is due to the default of the
person who is eligible employee.
Application for gratuity: A this Act or any
1
gratuty of gratuity under (i) The employer has obtained permission in writing
for payment of behalf shall send- a written from the controlling authority for the delayed payment on the
act on his
person authorised to prescribed form. Such ground of defauit of the employee.
in the
application to the employer within the time limit given below:
5. Dispute as regards gratuity: If there is any of
application shall be given
shall be made within the following disputes as regards gratuity, the employer shall
such an application
() Generally, gratuity became payable. deposit the amount of gratuity payable by him with the
the date on which the of an
30 days from superannuátion or retirement controlling authority.
date of shall be made
before
But where the () Dispute as regards the amount of gratuity payable
known, Such an application retirement.
employee is superannuation or to an employee under the Act.
date of
30 days of the an employee is
eligible for
heir of (ii) Dispute as regards the admissibility of any claim
(ii) Where a legal application shall be made within of an employee for payment of gratuity.
such became payable.
payment of gratuity, which the gratuity
the date on (i) Dispute as regards the person entitled to receive
one year from of gratuity: As
Determination of the amount employer shall the gratuity.
becomes payable, the
2.
The persons raising the disputes as above, may make
soon as the gratuity gratuity. The employer shall determine
determine the amount of whether an application an application to the controlling authority for deciding the
irrespective of the fact not. Then, he dispute. The controlling authoiruty shall make a due enquiry
this amount has been made or and give the parties to the dispute a reasonable opportunity
of gratuity gratuity
for payment
in writing, specifying the amount of payable of being heard. Than, he shall determine the matter or
shall give a notice gratuity is
the.person to whom the matters in the dispute. If any amount is found to be payable
so determined, tocontrolling authority. to the employee as per his decision, he shall direct the
and also to the arrange employer to pay such amount or such amount as
reduced
of gratuity: The employer shall which
3. Payment the date on
the gratuity, within 30 days from
to pay
 D 129
Ly the amount already D. 130
The controlling authoritydeposited with him by the employer.
shall pay the amount deposited by
appellate authority may confirm, modify or reverse the decision
the employer including the of the controlling authority.
excess amount, if any, to the
person entitled thereto. Recovery of Gratuity (Sec. 8)
Powers of the Controlling Authority If the amount of gratuity payable under the Act is not
paid by the employer within the prescribed time to the person
The controlling authority shall have the same
powers entitled thereto, the affected person shall make an application
as are vested in a civil court for conducting an to the controlling authority. The controlling authority shal
enquiry as issue a
regards disputes. Such powers are as follows: certificate for that amount to the Collector. The
Collector shall recover the amount together with compound
() Enforcing the attendance of any person or interest as arrears of land revenue and pay the same to
examining him on oath. the person entitled thereto. The rate of interest for this
(ii) Requiring the discovery and production of purpose may be notified by the Central Government fron
time to time.
documents.
Before issuing a certificate to the Colletor, the
(i) Receiving evidence on affidavits. controlling authority shall give the employer a reasonable
examination of opportunity of showing cause against the issue of such
(iv) Issuing commission for the
witnesses. certificate. Further, the amount of interest payable under this
section shall not exceed the amount of gratuity payable under
Appeal thËs Act.
order of the controlling Questions
Any person affected by an Government
appropriate
autority may make an appeal to the by the appropriate
Small Questions
or such other authority as may be specified
appeal shall be made 1. Who is a controlling authority?
Government in this behalf. Such an of the order. If
date of receipt 2 What do you mean by continuous service?
within sixty days from the appellate authority is
or the 3. Define the terms employer and employee.
the appropriate Government was prevented by sufficient cause 4
satisfied that the appellant What is the mneaning of superannuation?
may extend the said period
from making the appeal, they State the rules regarding nomination.
by afurther period of 60 days. But the appeal by an employer
admitted only on satisfaction of one of the following Big Questlons
shall be
conditions: 1. Explain the rules for the payment of gratuity under
of a certificate from the controlling
(0) Production with the Payment of Gratuity Act.
authority to the effect that the appellant has deposited
deposited in case of a dispute 2, Explain the provisIons regarding the determination
him the amount required to be and recovery of gratuity.
under section 7(4).
appellate authority.
(iü) Depositing such amount with the
reasonable
After giving the parties to the appeal a
Government or
opportunity of being heard, the appropriate