Dear Sir,
Our factory is running from 2006 and covered under Factories Act 1948.
I want to know what is the procedure for Applicability of Gratuity Act.
1.Is it compulsory to insure the worker under LIC or not? We are covered under ESI Act already.
2.Formalities for intimation to any concerned department.
I have read that if an employee completes one year continuous service than we have to fill FORM F. What is meant by one year service? Is it count from start of factory or after applicability of Act.
Please help me.
Shalu
HR EXECUTIVE
GURGAON
From India, Delhi
5Our factory is running from 2006 and covered under Factories Act 1948.
I want to know what is the procedure for Applicability of Gratuity Act.
1.Is it compulsory to insure the worker under LIC or not? We are covered under ESI Act already.
2.Formalities for intimation to any concerned department.
I have read that if an employee completes one year continuous service than we have to fill FORM F. What is meant by one year service? Is it count from start of factory or after applicability of Act.
Please help me.
Shalu
HR EXECUTIVE
GURGAON
From India, Delhi
Your factory will come under Payment of Gratuity Act if you have been employing 10 or more workers. It is not necessary that your factory should complete 5 years of commencement of operation for coverage of Gratuity Act. This is because, gratuity is payable to the dependents of a deceased employee irrespective of his service. That is why nomination is collected from every employee in form F once he completes one year of service. Year of service does not mean since the factory was established but since an employee joined the company. It is mandatory that at the end of the year the projected amount of gratuity should be deposited in LIC's gratuity fund. As per new Accounting Standards, an actuarial valuation of the gratuity liability taking into consideration of the gratuity qualifying salary, age of employees and their service is to be done before the accounts are finalised for statutory audit.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Dear Friend
If an employee expired after complection of one year we have to pay the gratuity to his nominee calculating up to his retirement period. In this case there may not be 5 year of complection for eligibility. hence we have to fil the form and to keep ready.
regards
alphonse
From India, Madras
If an employee expired after complection of one year we have to pay the gratuity to his nominee calculating up to his retirement period. In this case there may not be 5 year of complection for eligibility. hence we have to fil the form and to keep ready.
regards
alphonse
From India, Madras
I have a disagreement on the point "If an employee expired after complection of one year we have to pay the gratuity to his nominee calculating up to his retirement period". There is no such provision under the Payment of Gratuity Act which makes it mandatory on the part of the employer to pay gratuity in respect of deceased employee calculated till his date of superannuation. There is provision that gratuity should be paid for the service (till date of death) irrespective of whether he has put in five years. At the same time it is the scheme of Life Insurance Corporation of India with which a gratuity fund is required to be constituted under section 4A of the Payment of Gratuity Act that provides for death cum gratuity insurance which provides for payment of gratuity calculated for the date upto his date of retirement subject to a maximum of a sum (I believe it is Rs 4 lakhs)
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Hello,
I need a clarification about projected amount being deposited to LIC fund. I don't think that is mandatory, I have not heard of any legislation making this a mandatory requirement.
An employer is free to keep the gratuity plan "unfunded", which means they don't have to buy the LIC policy. However in such cases, they will HAVE to pay gratuity to any eligible employee from their normal business expenditure. And as you have stated actuarial valuation of gratuity is mandatory under AS15 & they have report it in their annual reports. This is required in both cases, whether they buy the LIC policy or not.
Thanks
Ravi
From India, Delhi
I need a clarification about projected amount being deposited to LIC fund. I don't think that is mandatory, I have not heard of any legislation making this a mandatory requirement.
An employer is free to keep the gratuity plan "unfunded", which means they don't have to buy the LIC policy. However in such cases, they will HAVE to pay gratuity to any eligible employee from their normal business expenditure. And as you have stated actuarial valuation of gratuity is mandatory under AS15 & they have report it in their annual reports. This is required in both cases, whether they buy the LIC policy or not.
Thanks
Ravi
From India, Delhi
By projected amount of gratuity, I only meant the gratuity which is likely to be paid in the financial year. I hope you have gone through section 4A of the Payment of Gratuity Act. Regards, Madhu.T.K
From India, Kannur
From India, Kannur
Sir, We have hire a housekeeping agency. Are, we should pay the salary of their supervisors.
From India, Gurgaon
From India, Gurgaon
Dear Senior, I just want to know that if a person have 4years 6th month and company did terminate form there service, is they are eligible for gratuity. kindly help me w/Regards Rajesh verma
From India, Calcutta
From India, Calcutta
Hello,
In order to be eligible for Gratuity, a person has to be in continuous service for 5 years. In the 5th year, 240 days is considered to be 1 full yr of service. In other words 4yr & 240 days of continuous service is required for Gratuity.
Hope this helps
Thanks
Ravi
From India, Delhi
In order to be eligible for Gratuity, a person has to be in continuous service for 5 years. In the 5th year, 240 days is considered to be 1 full yr of service. In other words 4yr & 240 days of continuous service is required for Gratuity.
Hope this helps
Thanks
Ravi
From India, Delhi
It is true that 240 days in a year will constitute one year of service but it does not mean that a person who has completed 4 years and 240 days in the fifth year should be eligible for gratuity. It is also true that there are some court verdicts which allowed gratuity to those who have completed 4 years and 240 days but by that verdicts no amendment has taken place in the Payment of Gratuity Act and therefore, 4+240 days can not be accepted as a general rule. Courts verdicts are based on situations.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
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