Contract Labour Act, 1970

Introduc�on:

• The Contract Labour (Regula�on and Aboli�on) Act, 1970, enacted by the Indian Legislature,
aims to regulate the employment and working condi�ons of contract labor in specific
establishments.

• The primary objec�ves are to ensure the welfare and rights of contract laborers, prevent
their exploita�on, and provide a legal framework for their employment.

Applicability (Sec.1(4)):

• Applies to establishments where 20 or more contract laborers were employed on any day in
the preceding twelve months.

• Encompasses contracts of both Government and local authori�es.

Not Applicability (Sec.1(5)):

• Excludes establishments where work is of an intermitent or casual nature, unless such work
persists for more than 120 days in the last year or is seasonal, exceeding 60 days in a year.

Objec�ves:

• Regulate employment and ensure the welfare of contract labor.

• Prevent exploita�on and establish accountability among principal employers and contractors.

• Mandate clean and safe working condi�ons, set limits on working hours, and require direct
payment of wages to protect the rights and interests of contract laborers.

Chapter I - Preliminary:

• Defini�ons:

• Contractor: An individual or en�ty supplying contract labor to an establishment,

responsible for their employment and management.

• Principal Employer: The en�ty or person owning or controlling the establishment

where contract laborers work, ensuring mandated benefits and protec�ons.

Chapter II - The Advisory Boards:

• Central Advisory Board:

• Consists of a Chairman appointed by the Central Government, the Chief Labor

Commissioner (Central), and members (not less than eleven, not exceeding
seventeen).

• State Advisory Board:

• Comprises a Chairman appointed by the State Government, the Labor Commissioner

(or nominee), and members (not less than nine, not exceeding eleven).

Chapter III - Registra�on of Establishments Employing Contract Labour:

 • Appointment of Registering Officers (Sec.6):

• Gazeted Officers appointed as registering officers with defined limits for exercising
powers.

• Registra�on of Establishments (Sec.7):

• Principal employers must apply for registra�on with the registering officer in the
prescribed manner, including a fee ranging from Rs. 20 to 500 based on the number
of employed workmen.

• Upon complete applica�on, the registering officer issues a cer�ficate of registra�on.

Chapter III - Registra�on of Establishments Employing Contract Labour (Con�nued...):

• Revoca�on of Registra�on (Sec.8):

• Registra�on may be revoked if obtained by misrepresenta�on, suppression of

material facts, or for any other reason rendering it useless or ineffec�ve.

• Effect of Non-Registra�on (Sec.9):

• Failure to register within the s�pulated �me (as per Sec�on 7) leads to punishment
under Sec�on 36.

Chapter IV - Licensing of Contractors:

• License Not Transferable:

• License fees range from Rs. 15 to 375, depending on the number of workmen
employed by the contractor, along with a security deposit.

• No Contractor Without a License (Sec.12):

• No contractor to undertake or execute any work through contract labor without a

license.

• Appointment of Licensing Officers (Sec.11):

• Appointment of officers with defined limits for exercising powers.

• Grant of License (Sec.13):

• Applica�on, inves�ga�on, and validity for a specified period (usually 12 months),

renewable.

Chapter IV - Licensing of Contractors (Con�nued...):

• Revoca�on, Suspension, and Amendment of Licenses (Sec.14):

• Licensing officer empowered to revoke, suspend, or amend a license on grounds like

misrepresenta�on or non-compliance with condi�ons.

• Authority to forfeit the security deposit.

Chapter IV - Licensing of Contractors (Con�nued...):

• Appeal (Sec.15):
 • The aggrieved person has 30 days from receiving the order to appeal to an appellate
officer appointed by the government.

• The officer may consider appeals filed a�er 30 days with a valid reason.

Chapter V - Welfare and Health of Contract Labour:

• Canteens (Sec.16):

• Government may make rules specifying the number, standards, and provisions of
canteens in establishments with contract labor.

• Rest-Rooms (Sec.17):

• Mandates rest-rooms or suitable alterna�ve accommoda�on with adequate ligh�ng,

ven�la�on, drinking water, latrines, and washing facili�es.

Chapter VI - Penal�es and Procedure:

• Obstruc�ons (Sec.22):

• Penal�es for obstruc�ng inspectors in the discharge of du�es, including

imprisonment for up to three months, a fine of up to Rs. 500, or both.

• Contraven�on of Provisions (Sec.23):

• Penal�es for contravening Act provisions or license condi�ons, including

imprisonment for up to three months, a fine of up to Rs. 1000, or both.

• Other Offenses (Sec.24):

• Penal�es for offenses not specifically addressed elsewhere, including imprisonment

for up to three months, a fine of up to Rs. 1000, or both.

Chapter VI - Penal�es and Procedure (Con�nued...):

• Offenses by Companies (Sec.25):

• If a person commi�ng an offense is a company, the company and responsible

individuals are deemed guilty and liable to be proceeded against and punished.

• If the offense happened with the consent, connivance, or neglect of any director,
manager, or officer, they are also held responsible.

• Cognizance of Offenses (Sec.26):

• Courts can only take cognizance based on complaints made by inspectors with the
previous sanc�on in wri�ng.

• No court inferior to a Presidency Magistrate or a magistrate of the first class can try
offenses punishable under this Act.

Chapter VII - Miscellaneous:

• Inspec�ng Staff (Sec.28):

• The appropriate government may appoint inspectors to enforce the Act, defining
local limits within which they exercise powers.
 • Registers and Other Records (Sec.29):

• Principal employers and contractors must maintain registers and records, providing
par�culars of contract labor, nature of work, rates of wages, and other prescribed
informa�on.

• No�ces containing informa�on about hours of work, nature of duty, and other
prescribed details must be exhibited within the premises of the establishment.

Chapter VII - Miscellaneous (Con�nued...):

• Effect of Laws and Agreements (Sec.30):

• The provisions of this Act prevail over inconsistent laws, agreements, or contracts.

• Nothing prevents contract labor from entering into agreements for rights or
privileges more favorable than those mandated by the Act.

• Power to Exempt in Special Cases (Sec.31):

• The appropriate Government may exempt establishments from the Act's provisions
in emergencies, subject to condi�ons and restric�ons.

Chapter VII - Miscellaneous (Con�nued...):

• Protec�on of Ac�on (Sec.32):

• No legal ac�on against government officials, including registering or licensing

officers, and members of the Central or State Board, for ac�ons taken in good faith.

• No suit or legal proceeding against the Government for damage caused or likely to
be caused by ac�ons done in good faith under this Act or its rules.

• Power to Give Direc�ons (Sec.33):

• The Central Government may give direc�ons to the Government of any State for
the execu�on of provisions contained in this Act.

Chapter VII - Miscellaneous (Con�nued...):

• Power to Remove Difficul�es (Sec.34):

• If any difficulty arises in giving effect to the Act's provisions, the Central
Government may make necessary provisions, not inconsistent with the Act,
through orders published in the Official Gazete.
The Minimum Wages Act, 1948
Introduc�on:

• The Minimum Wages Act, 1948, is a crucial piece of legisla�on aimed at providing minimum
wages to workers in the organized sector, preven�ng exploita�on, and empowering the
government to fix and revise wages �mely.

Historical Backdrop:

• The ini�a�ve for wage determina�on began in 1920 with Shri K.G.R.Choudhary se�ng up
boards.

• Interna�onal Labour Conference conven�ons in 1928 laid the founda�on for wage-fixing
machinery.

• The Minimum Wages Bill was introduced in the Central Legisla�ve Assembly on 11.4.46,
coming into force on 15.3.48.

• The Commitee on Fair Wage in 1948 provided guidelines for wage structure.

Broad Features of the Act:

Minimum Wage Fixa�on [Sec. 3]:

• Principles for fixa�on of minimum rates include �me rate, piece rate, guaranteed �me rate,
and over�me rate.

• The Act covers different employments, classes of work, age groups, and locali�es.

Components of Minimum Wages [Sec. 4]:

• Minimum wages may consist of a basic rate and cost of living allowances.

• Components include Basic + Dearness Allowance + House Rent Allowance, revised every five
years.

Eligibility and Appropriate Government [Sec. 2(b)]:

• Appropriate Government for scheduled employments by Central Government, railways, etc.,

is the Central Government.

• In all other cases, it is the State Government.

• Categories covered include permanent employees, contract employees, casual workers, and
trainees.

Defini�on of Wages [Sec. 2(h)]:

• Minimum wages encompass all remunera�on for work done, including basic, dearness
allowance, and house rent allowance.

• Basic rates decided by Minimum Wages Commitee, dearness allowance changes every six
months.

Fixa�on of Minimum Rates of Wages [Sec. 3]:

 • The Appropriate Government shall fix rates for employments in the Schedule and may
review and revise them every five years.

• Different employments, classes of work, age groups, and locali�es can have different
minimum wages.

Commitees and Advisory Boards [Sec. 5, 7, 8]:

• Commitees and Advisory Boards, comprising employers, employees, and independent

persons, play a key role in wage fixa�on.

• Commitees are appointed by the government and consist of an equal number of members
from employers, employees, and independent persons.

Fixing Minimum Rates of Wages [Sec. 5]:

• Recommenda�ons of Advisory Boards for different classes are published in Na�onal

Publica�ons for public comments before no�fica�on.

• The wage fixa�on process involves consulta�on with commitees and sub-commitees.

Composi�on of Commitees [Sec. 9]:

• Each commitee, sub-commitee, and Advisory Board shall consist of persons nominated by
the appropriate Government, represen�ng employers and employees in scheduled
employments, and independent persons as the Chairman.

Correc�on of Errors [Sec. 10]:

• The Appropriate Government can correct clerical or arithme�cal mistakes in wage orders.

• No�fica�ons correc�ng errors are placed before the Advisory Board for informa�on.

Records to be Maintained [Sec. 18]:

• Employers must maintain records containing par�culars of employed persons, the work
performed by them, the wages paid to them, and the receipts given by them.

• Labor Commissioners or appointed authori�es can hear claims regarding non-payment of

minimum wages.

Claims [Sec. 20]:

• Any aggrieved person may apply to the authority for setling his claims within 6 months.

• The authority has the power to hear and decide claims related to minimum wages.

Penal�es [Sec. 22]:

• Imprisonment which may extend up to 6 Months or Fine which may extend up to Rs 500/- or
Both for payment of less than minimum wages to employees.

Contrac�ng Out [Sec. 25]:

• Any contract or agreement relinquishing or reducing an employee's right to a minimum rate

of wages is null and void.

Power of State and Central Government [Sec. 27, 28, 29]:

 • The State Government has the power to add employments to the Schedule, provided it
no�fies its inten�on in the Official Gazete not less than three months in advance.

• The Central Government can give direc�ons to a State Government for the effec�ve
execu�on of this Act in the State.

• The Central Government has the power to make rules, outlining the procedure, method of
vo�ng, manner of filling membership, and quorum necessary for the transac�on of business
of the Central Advisory Board.

Conclusion:

• The effec�ve implementa�on of the Minimum Wages Act, 1948, is crucial for ensuring fair
remunera�on to workers and preven�ng exploita�on. State and Central Governments play
dis�nct roles in fixing, revising, and overseeing compliance with minimum wages. The Act's
provisions are designed to create a just and equitable work environment in the organized
sector.
The Payment of Wages Act, 1936
Introduc�on:

• The Payment of Wages Act of 1936 governs the payment of wages to employees, both direct
and indirect.

• Its primary purpose is to protect employees from unlawful deduc�ons by employers and
ensure �mely salary payments.

• The Act is especially designed to benefit industrial employees with moderate salaries,
safeguarding their interests against irregulari�es and unauthorized deduc�ons.

Objec�ves:

1. Avoid Unnecessary Delays:

• Ensure �mely payment of wages to employees.

2. Prevent Unauthorized Deduc�ons:

• Safeguard employees against unlawful deduc�ons from their wages.

3. Payment on Working Days:

• Mandate the payment of wages on working days and not on holidays.

4. Restrict Payments in Kind:

• Prevent employers from making payments of wages in forms other than legal tender.

5. Regulate Payment in Certain Industries:

• Provide regula�ons for the payment of wages to specific categories of persons

employed in industries.

Applica�on of the Act:

• The Act applies to persons employed in factories, railways (directly or through contractors),
and can be extended to other industrial establishments by the Appropriate Government.

• Applicability requires a three-month no�ce of inten�on and no�fica�on in the Official

Gazete.

Responsibility for Payment of Wages [Sec�on 3]:

• The Act designates different individuals responsible for wage payments based on the type of
establishment:

• Factory: Manager

• Industrial Establishment: Person responsible for supervision

• Railways: Nominated person by railway administra�on

• Contractor: Person designated by the contractor directly in charge

Fixa�on of Wage-Periods [Sec�on 4]:

 • Every person responsible for wage payment must fix wage-periods.

• No wage-period should exceed one month, allowing for daily, weekly, fortnightly, or monthly
payments.

Time of Payment of Wages [Sec�on 5]:

• Different �melines for payment based on the number of employees:

• Less than 1000 employees: Within 7 days a�er the last day of the wage period.

• More than 1000 employees: Within 10 days a�er the last day of the wage period.

• Termina�on: If an employee is terminated, wages must be paid within 2 days.

• Changes in responsible persons or wage payments on working days only.

Wages to be Paid in Current Coin or Currency Notes [Sec�on 6]:

• Mandates payment of all wages in the form of currently used currency notes or coins.

• Specifies denomina�ons acceptable for payment.

Deduc�ons under the Payment of Wages Act:

1. Permited Deduc�ons:

• Authorized income tax or statutory deduc�ons.

• Contribu�ons to authorized insurance schemes or welfare funds.

• Deduc�ons for authorized coopera�ve socie�es or ins�tu�ons.

• Deduc�ons for recovery of authorized loans or advances.

2. Prohibited Deduc�ons:

• Any deduc�ons not authorized in wri�ng by the employee.

• Deduc�ons for fines, unless specified in the employment agreement.

• Deduc�ons for damages or losses without reasonable cause.

• Deduc�ons for absence from duty without authorized leave.

• Deduc�ons for recovery of house accommoda�on rent under specific circumstances.

Maximum Deduc�on Limit:

• Total deduc�ons from an employee's wages cannot exceed 75% of their wages in any wage
period.

• Payment should be made in legal tender or by check or credit to a bank account, as per the
employee's choice.

Penal�es [Sec�on 15]:

1. Deduc�ons without Proper Authority (Sec�on 7):

• Maximum penalty: Up to Rs. 300.

 2. Non-Payment of Wages (Sec�on 7):

• Maximum penalty: Up to Rs. 1,000.

3. Penalty for False Record or Returns (Sec�on 14):

• Maximum penalty: Up to Rs. 500.

Procedure for Imposi�on of Penal�es [Sec�on 17]:

1. Complaint:

• Any employed person or authorized representa�ve can file a complaint.

2. Appointment of Authority:

• Appropriate government appoints authori�es to hear and decide complaints.

3. Opportunity to be Heard:

• Par�es are given an opportunity to be heard and produce evidence.

4. Order:

• A�er considering evidence, the authority passes an order specifying the penalty.

Appeals [Sec�on 18]:

• Both the employer and the employee have the right to appeal against the order imposing a
penalty.

• Appeals are made to the appellate authority within the prescribed �me limit.

Penal�es for Specific Offenses [Sec�on 20]:

1. Delay in Payment or Unauthorized Deduc�ons:

• Fine not less than Rs. 500 but may extend to Rs. 1,000.

2. Failure to Pay on Working Day, Payment in Coin, etc.:

• Fine up to Rs. 500 for each offense.

3. Failure to Maintain Records and Furnish Returns:

• Fine not less than Rs. 1,500 but may extend to Rs. 7,500.

4. Obstruc�ng Inspectors:

• Fine not less than Rs. 200 but may extend to Rs. 1,000.

5. Subsequent Offenses:

• Imprisonment not less than one month but may extend to 6 months and a fine of Rs.
3,750 to Rs. 22,500.

6. Addi�onal Fine for Failure to Pay Wages by Fixed Date:

• Addi�onal fine may extend to Rs. 100 per day.

Payment of Undisbursed Wages in Case of Death [Sec�on 25A]:

 • Undisbursed wages of a deceased employee paid to the person nominated by the employee.

• If no nomina�on or cannot be paid to the nominee, deposited with the prescribed authority.

Null and Void Contracts [Sec�on 23]:

• Any contract or agreement atemp�ng to deprive an employee of rights conferred by this Act
is null and void.
Maternity Benefit Act, 1961 - In-Depth Analysis

Introduc�on:

Title: Maternity Benefit Act, 1961

The Maternity Benefit Act, 1961, is a crucial legisla�on safeguarding the rights of women employees
during their maternity period. It aims to prevent financial disadvantages faced by women due to
maternity and ensures they have sufficient �me off for post-childbirth recovery and newborn care.

• Extent: Covers the en�re country, including Jammu and Kashmir since 1970.

• Sec�ons: Comprises a total of 30 sec�ons.

Objec�ves:

1. Regula�on of Employment:

• Govern the employment of women in specific periods before and a�er childbirth.

2. Maternity Benefits:

• Provide comprehensive maternity benefits, including leave, wages, bonus, and

nursing breaks.

3. Dignity of Motherhood:

• Protect the dignity of motherhood by ensuring the well-being of women and their
children during maternity.

Applicability of the Maternity Act:

• The Act applies na�onwide and ini�ally to establishments like factories, mines, or planta�ons
with 10 or more employees in the past 12 months.

• Addi�onally includes establishments related to equestrian, acroba�c, and other

performances.

• Enforcement responsibility lies with the Central Industrial Rela�ons Machinery (CIRM) in the
Ministry of Labour.

Du�es of Employee for Maternity Benefits:

• Sec�on 5(2): Requires the woman to work for at least 80 days in the 12 months preceding
the expected delivery date.

• Can request light work for a month ten weeks before delivery with a pregnancy cer�ficate.

• Must provide writen no�ce seven weeks before delivery, naming a person for payment if
she cannot receive it herself.

Maternity Benefits:

Cash Benefits:

• Leave: 26 weeks (8 weeks before expected delivery, 18 weeks a�er).

• Medical Bonus: Minimum Rs. 3,500.

 • Miscarriage: 8 weeks of leave immediately a�er the event.

• Tubectomy Opera�on: 2 weeks' leave with wages.

• No Discharge or Dismissal: Prohibited during maternity leave.

• Light Work: Mandatory for 10 weeks before delivery.

• Nursing Breaks: Two breaks un�l the child turns 15 months.

• No Deduc�on: Normal and usual daily wages cannot be deducted.

Non-Cash Benefits:

• Creche Facility: Required for establishments with 50 or more employees.

• Four Visits to Creche: Permited for women, including rest intervals.

Legal Obliga�ons Under the Act:

• Employing women in the six weeks following delivery or miscarriage is prohibited.

• No woman can work during the six weeks immediately following delivery.

• Discharging or dismissing a woman on account of misconduct during maternity is unlawful.

• In cases of gross misconduct, the employer can communicate the depriva�on of maternity
benefits in wri�ng.

• A woman can appeal to the prescribed authority within 60 days of depriva�on.

Rights, Duty, and Penalty of Employer:

• Forfeiture of Maternity Benefit: Penal�es include imprisonment for a minimum of three

months to a maximum of one year and a fine ranging from Rs. 2,000 to Rs. 5,000.

• Abstract of Act and Rules: Employers must display an abstract of provisions in the
establishment.

• Records Management: Employers must maintain prescribed registers, records, and muster-
rolls.

Key Highlights of the Amendment 2017:

1. Increase in Maternity Benefits:

• Paid maternity leave increased to 26 weeks from 12 weeks.

• Leave prior to expected delivery date extended to 8 weeks.

2. No Increased Benefit for Third Child:

• Increased maternity benefit available only for the first two children.

• Women with two or more surviving children en�tled to 12 weeks of maternity

benefit, of which not more than 6 weeks are before the expected delivery date.

3. Adop�on/Surrogacy:
 • Women adop�ng a child below 3 months or commissioning mothers en�tled to 12
weeks of maternity benefits.

• Creche facility mandatory for establishments with 50 or more employees.

4. Work from Home:

• Employers may allow women to work from home post the maternity benefit period.

5. Prior In�ma�on:

• Establishments must inform women about every benefit under the Act at the �me of
their ini�al appointment.

Concerns and Compara�ve Study:

• Concerns with Sec�on 5(4):

• Non-applicability to the unorganized sector.

• Discriminatory leave provisions for adop�ve mothers.

• Delays in adop�on procedures impac�ng benefits for adop�ve mothers.

Compara�ve Study of Maternity Act Benefits for Some Countries:

Country Maternity Leave Wages Paid

USA Twelve weeks No na�onal program, state benefits may apply

New Zealand Fourteen weeks Fourteen weeks paid, followed by unpaid

France Sixteen weeks Full salary

Hungary Twenty-four weeks Seventy percent of average monthly salary

Ireland Twenty-six weeks Eighty percent of average monthly salary

UK Fi�y-two weeks Ninety percent of average weekly earnings

Sweden Four hundred days Eighty percent of average monthly salary

This comprehensive analysis covers the Maternity Benefit Act, 1961, detailing its objec�ves,
applicability, du�es, benefits, legal obliga�ons, employer responsibili�es, amendments, and a
compara�ve study with maternity benefits in select countries.
Workmen's Compensa�on Act, 1923
A. Objec�ve: The Workmen's Compensa�on Act, 1923 aims to provide relief to workmen or their
dependents in cases of accidents arising out of and in the course of employment, resul�ng in death
or disablement. It imposes statutory liability on employers to compensate employees for physical
disabili�es and diseases sustained during employment.

B. Workmen's Compensa�on Act, 1923:

1. Scope:

• Applicability: The Act extends to the whole of India.

• Effec�ve Date: Came into force on July 1, 1924.

2. Introduc�on:

• Defini�on: The Act is a vital social security legisla�on providing financial protec�on
to workmen and dependents in case of accidental injuries.

• Applicability: Covers various employments specified in Schedule II, including

Factories, Mines, Planta�ons, Mechanically Propelled Vehicles, Construc�on Work,
Hazardous Occupa�ons, and certain Railway Servants.

3. Chapter 1: Preliminary:

• Commissioner Defini�on: An official appointed under Sec�on 20 of the Act.

• State Government's Role: Authority to appoint a Commissioner through an Official

Gazete no�fica�on.

4. Sec�on 2: Defini�ons:

• Dependents: Primary (Widow, Minor legi�mate or adopted children, Unmarried

legi�mate or adopted daughters, Widowed mother) and Secondary (Son or daughter
over 18 years old and infirm, Widower, Parent excluding widowed mother, Minor
illegi�mate child, unmarried/married or widowed daughter if minor, Minor brother,
unmarried/widowed sister if a minor, Widowed daughter-in-law, Minor child of a
pre-deceased son, Minor child of a pre-deceased daughter if no parent is alive,
Paternal grandparent if no parent is alive).

• Employer: Any person or managing agent, and in cases of temporary lending, the
person to whom the workman is lent.

5. Sec�on 4: Workman:

• Defini�on: Includes railway servants, masters, seamen, and others, excluding those
with casual employment.

• Disablement: Any loss of capacity to work or move, leading to either total or par�al,
temporary, or permanent disability.

6. Sec�on 5: Wages:

• Defini�on: "Wages" include privileges or benefits es�mable in money, excluding

travel concessions or contribu�ons to pension or provident funds.
 • Calcula�on Methods: Monthly wages vary based on service dura�on, either 12
months or less, with piece rates considered.

7. Chapter 2: Workmen’s Compensa�on:

• Sec�on 3: Employer's Liability: Imposes liability on the employer for compensa�on if

personal injury results from an accident during employment.

• Sec�on 4: Amount of Compensa�on: Specifies compensa�on for death, permanent

total disablement, and permanent par�al disablement.

8. Sec�on 6: Commuta�on of Half-Monthly Payments:

• Allows the redemp�on of half-monthly payments through a lump sum.

9. Sec�on 7: Distribu�on of Compensa�on:

• Regulates the distribu�on of compensa�on among dependents, with the

Commissioner overseeing funeral expenses and necessary adjustments.

• Compensa�on not assignable, atachable, or chargeable.

10. Chapter 3: Commissioners:

• Sec�on 19: Reference to Commissioners: Disputes under the Act resolved by

Commissioners, barring Civil Courts.

• Sec�on 20: Appointment of Commissioners: State Government appoints Commissioners

with special knowledge.

• Sec�on 21: Filing Applica�on: Dependents file applica�ons for compensa�on, detailing
circumstances, and relief sought.

11. Chapter 4: Rules:

• Sec�on 32: Power of the State Government: Grants the State Government power to make
rules for various aspects, including medical examina�ons, transfers, fees, representa�on in
proceedings, disease cer�fica�on, and assessment of incapacity.

• Sec�on 36: Rules made by Central Government: Rules made by the Central Government
must be laid before Parliament.
Payment of Gratuity Act, 1972
A. Objec�ve: The Payment of Gratuity Act, 1972, aims to provide a scheme for the payment of
gratuity to employees engaged in various sectors such as factories, mines, oilfields, planta�ons,
ports, railway companies, shops, or other establishments. It ensures financial security for employees
who have completed a minimum of five years of con�nuous service.

B. Payment of Gratuity Act, 1972:

1. Sec�on 1: Short Title, Extent, Applica�on, and Commencement:

• Short Title: The Act is �tled the Payment of Gratuity Act, 1972.

• Extent: It extends to the whole of India.

• Application: Applies to specified establishments, including factories, mines, oilfields,

planta�ons, ports, railway companies, shops, and others.

2. Sec�on 2: Defini�ons:

• Employee: Any person, other than an appren�ce, employed on wages in various

sectors.

• Employer: Defined with respect to the type of establishment and control, covering
Central Government, State Government, local authori�es, and others.

• Re�rement and Superannua�on: Clearly defines re�rement and superannua�on for

the purpose of the Act.

• Wages: Includes emoluments earned by an employee while on duty or leave,

excluding certain components like bonus, commission, and allowances.

3. Sec�on 2A: Con�nuous Service:

• Defines con�nuous service and provides criteria for an employee to be considered in

con�nuous service.

• Differen�ates con�nuous service for regular and seasonal establishments.

4. Sec�on 3: Controlling Authority:

• The appropriate Government appoints a controlling authority responsible for

administering the Act.

• Different controlling authori�es may be appointed for different areas.

5. Sec�on 4: Payment of Gratuity:

• Specifies condi�ons under which gratuity shall be payable, including superannua�on,

re�rement, resigna�on, or death due to accident or disease.

• Mandates con�nuous service for a minimum of five years.

6. Sec�on 5: Power to Exempt:

 • Provides the appropriate Government with the power to exempt certain
establishments or employees if they already receive gratuity or pensionary benefits
at least as favorable as those under this Act.

7. Sec�on 6: Nomina�on:

• Requires employees with one year of service to make nomina�ons.

• Allows distribu�on of gratuity among more than one nominee.

• Specifies condi�ons for making nomina�ons based on family status.

8. Sec�on 7: Determina�on of the Amount of Gratuity:

• Outlines the formula for calcula�ng gratuity.

• Sets a maximum limit of Rs. 3,50,000 for gratuity payable to an employee.

9. Sec�on 7A: Inspectors:

• Defines the powers of inspectors, including calling for informa�on, inspec�ng

premises, examining employers and servants, and exercising other prescribed
powers.

10. Sec�on 8: Recovery of Gratuity:

• Empowers the controlling authority to issue a cer�ficate to the Collector for recovery
if the employer fails to pay gratuity within the prescribed �me.

• Specifies the liability of employers, including compound interest.

11. Sec�on 9: Penal�es:

• Imposes penal�es for various offenses, including imprisonment, fines, and penal�es
for knowingly making false statements.

• Specifies penal�es for failure to comply with the Act and offenses related to non-
payment of gratuity.

12. Sec�on 10: Exemp�on of Employer from Liability in Certain Cases:

• Details the process for employers to be exempted from liability in cases where
offenses are commited by another person.

13. Sec�on 11: Cognizance of Offences:

• States that no court shall take cognizance of offenses under the Act except on a
complaint made by or under the authority of the appropriate Government.

• Allows the appropriate Government to authorize the controlling authority to make a

complaint in case of non-payment of gratuity.

14. Sec�on 12: Protec�on of Ac�on Taken in Good Faith:

• Provides protec�on to the controlling authority or any person ac�ng in good faith
under the Act.

15. Sec�on 13: Protec�on of Gratuity:

 • Ensures that gratuity payable under this Act is not liable to atachment in execu�on
of any decree or order of any civil, revenue, or criminal court.

16. Sec�on 14: Act to Override Other Enactments, etc.:

• Asserts that the provisions of this Act shall have effect notwithstanding anything
inconsistent in any other enactment, instrument, or contract.

17. Sec�on 15: Power to Make Rules:

• Empowers the appropriate Government to make rules for carrying out the provisions
of the Act.

• Specifies the procedure for laying down rules before Parliament.