Payment of Gratuity Act, 1972

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Gratuity is a social security in form of retirement benefit provided to an employee. It is a lump sum payment made by employer to employee for past services when employment comes to an end due to retirement or superannuation. 

Gratuity is a lump sum amount paid by employer to employee in case of retirement or death. It must be paid in case The Payment Of Gratuity Act, 1972 applies else it is discretionary.

In case of death of employee gratuity is paid to the family members of employee. It is a gift given by employer to his employees on retirement or death.  If the payment of gratuity act applies to an employer then it is compulsory for the employer to pay gratuity to the employees. The payment of gratuity is not compulsory for those employers on whom this law is not applicable. 

If the employer is covered under PGA then he will have to pay gratuity to the eligible employee. Gratuity is paid to those employees who work for continuously 5yrs or more.

In event of death of employee then continuous service of 5 yrs is not required.

The Payment Of Gratuity Act, 1972 extends to the whole of India. It shall not extend to the State of Jammu and Kashmir

As per Section 1(3) It shall apply to--
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

(3A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.

The expression ‘law‘ used in Section 1(3)(b) means any law in respect of shops, establishments - commercial or non-commercial. (K. Gangadhar Vs The Appellate Authority,)

It also includes Municipal Board. (Municipal Board Vs Union of India)

Central Government may, by notification, specify in this behalf
Motor Transport undertakings, 
chambers of commerce and industry,
inland water transport establishments, 
Solicitors’ Officers, 
Local Bodies and 
circus Industry,

In which 10 or more persons are employed or were employed on any day of the preceding 12 months, as classes of establishments to which the Act shall apply.

These online MCQ Mock tests and MCQ questions includes all main concepts of the chapter (Payment of Gratuity Act, 1972) in CS Executive Module II Industrial, Labour and General Law (ILGL MCQ based OMR) Exam.

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