final_payment of gratuity act_presentation

7/31/2019 Final_Payment of Gratuity Act_presentation

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GROUP MEMBERS

Shraddha Palav

Shreyas Salvi

Suraj Sharma

Rohit Shetty

Mandar Surve

Lokesh Palayekar


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OVERVIEW of an ACT Established in 1972.

Established to provide a payment of gratuity toemployees engaged in factories.

Act is applied to every factory, mine, oilfield,railway company

A shop or establishment to which this Act hasbecome applicable shall continue to begoverned by this Act


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DEFINITION OF ACT

Act requires establishment of a Factory, Mine,Oilfield, Port, Railway company

Under the control of Central Government

A factory having branches in more than one State,will be governed by the Central Government

Under the control of State Government

in other cases like continuous service, controllingauthority, it will be controlled by State Government.


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DIFFERENT TERMS INVOLVED IN THE ACT

EMPLOYEE means a person employed on wages

EMPLOYER is in relation to any establishment

factory, mine, oilfield, plantation, port, railwaycompany or shop belonging to Central Governmentor State Government

FACTORY belongs to or under the control ofCentral Government

FAMILY in relation to an employee


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PURPOSES OF ACT

Employee shall be in CONTINUOUS SERVICE

Government should appoint CONTROLLING

AUTHORITY

PAYMENT OF GRATUITY

NOMINATION for the purpose of second provision


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GRATUITY SHALL

BE PAYABLE TO AN

EMPLOYEE ON

Termination ofservice

Superannuation

Retirement orResignation

Death orDisablement due toaccident or disease


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CONTINUOUS SERVICE

Uninterrupted service

Interruption due to leave, accident, Sickness,

strike, absence of leave (authorized) will betreated as Continuous Service.

Worked for 240 days in a year and 75 % of dayfor seasonal establishment.


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CONTROLLING AUTHORITY (SEC -3)

An appropriate Government may by notification,appoint any officer as a controlling authority, who isresponsible for controlling this act.

All the Assistant Labor Commissioners and LaborOfficers in the Labor Department have beenappointed Controlling Authority and all the DeputyLabor Commissioners have been appointedAppellate Authority under the Act.


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PAYMENT OF GRATUITY


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IN WHAT CONTINGENCY THE EMPLOYER

HAS TO PAY GRATUITY TO HIS EMPLOYEE

Continuous service for not less than 5 years.

Service is terminated on superannuation

Employee retires or resigns from service

Dies while in service

Disablement due to accident or disease.


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What is the rate of gratuity payable to theemployee? It is payable to employee at the rate of 15 days

wages for every completed year of service or

part thereof in excess of six month.

What is the maximum amount of gratuitypayable to employee? It shall not exceed to Rupees 3.5 Lacs, but

recent amendment made in act on March 2010where the slab has been increased to 10 lacs.


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IN WHAT CIRCUMSTANCES THE EMPLOYEE

LOSES HIS GRATUITY?

If the service of an employee have been terminatedfor his seditious/ disorderly conduct or act of

violence.

Service Terminated for any act/offence involving

moral turpitude( causing any damage or loss ordestruction of property belonging to employer)


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Gratuity is payable at 15 days wages every year of completed service.(6 months service will be treated as full year).

In case of Seasonal establishment, gratuity is payable at 7 days wagesfor each season.

DA is included but Bonus, HRA, OT is not.

Max gratuity is 10 lakhs.

Tax free.

Determination of the amount of gratuity


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Gratuity Calculation

Gratuity calculation formula :

1. basic/26 x 15 days x number of years of serviceOR2. BASIC + DA (Last Pay drawn) X 15 /26 X No. OF YEARS WORKS

For example, if an employee is drawing Rs.10,400/- per month as his lastdrawn salary and either he resigns/retires or his services are terminated afterworking for 20 years, he will be entitled to receive gratuity ofRs.120,000 asunder:-

10,400 (salary) x 15 (days) x 20 (years)/26 = Gratuity Amount Rs.120,000.

Gratuity Act Amendments India 2010

- Limit has been raised from 3.5 lacs to 10 lacs.

- Tax-free.
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Other Provisions relating Gratuity

Insurance on Gratuity Liability (Sec 4)

Every employer must obtain insurance of his gratuity liability with LIC or any other insurer.

Employee has the option if he is a member of gratuity fund established by an employer.

Nomination (Sec 6)

Every employee has to make a nomination in favor of family or any other person and kept incustody of the employer to receive the gratuity amount in case of any mishappening.

Applying for gratuity (Sec 7)

The employer arranges to pay the amount of gratuity within thirty days from the date it becomespayable to the person.

Aspect of Recovery (Sec 8)

the controlling authority issues a certificate to the collector who shall recover the amount not paidby the employer.


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Other Provisions relating Gratuity

Penalties for avoiding payments (Sec 9)

Imprisonment upto 6 months or fine of Rs. 10,000/- or both.

Exemption from liablity (Sec 10)

Exemption of employer from liability in certain cases (if the employee has committed

an offence).

Sec 13

Cannot be attached in execution any decree or order of any civil, revenue orcriminal court as per the Act.

Sec 15

Deals with power to make rules.


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Profession Tax and its slab

Maharashtra PT Slab is asunder:

0 - 2500 Nil

2500 - 3500 60

3501 - 5000 120

5001 - 10000 175

10001 - Above 200

In february it will be 300/- (This is because maximum PT payable is2500 p.a.)

Profession tax is different for different states.


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Aims of employee compensation Attract

Motivate Retain

Salary PolicyA good salary policy should look into, To establish justified salary differentials Equal pay for equal work


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Minimum Wages These ensure certain medical & other essential requirements of individuals.

Living Wages These ensure certain greater needs like social needs, sanitations, health

aspects & protections from misfortunes.

Fair Wages

These are fixed on basis of Productivity of labour Contribution of industry to the economy

Factors affecting Salaries Supply & demand Labor Unions Ability to pay Cost of living Government


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Features of good salary plan Easily understandable

Easily computable Capable of motivating

Rules of Payment of wages Sec 3 : Responsibility Of payment of wages Sec 4 : Fixation of wage period Sec 5 : Time of payment of wages

Sec 6 : Wages to be paid in current coins/notes Sec 8 : Fines

Sec 9-13 : Deductions


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Management function

Recruit

Manag

eSelect

Develop Train


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HRM CHALLENGES

Transition

Employers

MarketEmployees Market


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1. Globalization

Internationalization of business brings in thechallenges in terms of unfamiliarity with:

Employment laws

Languages Culture

Practices

Attitudes

Management styles

Work Ethics


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2. Corporate Re-organization

Expansions

MergersAcquisitionsJoint VenturesTake oversInternal restructuring

Liberalization

AnxietyUncertaintiesInsecuritiesFears

Employee Behavior


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3. New Organizational Forms

Exposure to international business has led to achange in the organizational structure and HRpolicies of the local companies.

The challenge for the HRM team is to replacethe existing HR policies that the organizationhas been following since ages with the newones.


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4. Changing Demographics of Workforce

Large number of young individuals

Growing number of women

Significant number of working mothers

More educated and aware workers

Career oriented couples

Workforce


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5. Changed Employee Expectations

With the changes in workforce demographics, employeeexpectations and attitudes have also transformed. Allurements likejob security, house and remunerations are no longer sufficient tohold back an employee within the organization. Thus it is one ofthe biggest challenge for HRM to come with different ways ofremunerating and motivating employees.

6. New Industrial RelationsApproach

In the changed industrial climate, trade unions are no longereffective. These days, employees are not that keen to join theunions and engage into strikes and lock-outs. Although this is apositive aspect, the negative aspect is that the employees (if

unsatisfied) often take up new jobs resulting in an increasedattrition rate.


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7. Renewed People Focus

Organizations have realized the importance of having atalented bunch of employees. Hence there is anincreased focus and fierce competition amongst theemployers to grab the best talent at whatever cost.

8. Managing the Managers

Managers are one of the toughest breeds of employees

to be managed. The usual rosy promises that work forthe normal employees may not work for the managersbecause of the fact that they have the insideinformation.


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9. Weaker Sections Interests

The growing number of women workers, minorities andother backward communities in the workforce hasresulted in the need for organizations to re-examinetheir policies so as to protect their interests.

10. Contribution to the Success ofOrganization

The biggest challenge to the HRM department is toensure that all the employees work towards thesuccess of the organization.

final_payment of gratuity act_presentation

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