The Payment of Gratuity Act, 1972 functions as a retirement benefit because the sum of accumulated amount is paid to the Employee after his retirement. The Supreme Court of India, in a case, referred to the Gratuity Act, stating that …that after a certain period of working for a particular company, the Employee is entitled to claim for the retirement benefit…
The Payment of Gratuity Act, 1972 was passed by the Indian Parliament on 21st August of 1972.

WHO IS ELIGIBLE UNDER THE GRATUITY ACT?

As per the decision of the Supreme Court of India, the payment of gratuity to the Employee is mandatory, once the Employee has served the establishment for at least 5 (Five) Years. An Employee becomes eligible to claim his Gratuity under the Gratuity Act when he leaves the Establishment. The reason for leaving may be resignation or retirement or can even be due to any medical condition caused by diseases of accidents and death.

Exception to the Rule: the criteria of completing the service of 5 years is not mandatory if, the cause of the termination of employment is (i) death of the Employee or; (ii) any disability due to diseases or accidents, making the Employee incapable of continuing the Services.

CALCULATION MADE UNDER THE PAYMENT OF GRATUITY ACT, 1972

Section 4(2) of the Gratuity Act, 1972 provides for a fixed formula to calculate the amount of Gratuity to be paid. However, under Section 4 (3) of the Gratuity Act, the maximum amount of Gratuity to be paid by the Establishment is fixed at Rs. 10,00,000/-.

FORMULA FOR CALCULATING GRATUITY:

{(Basic salary + D.A) x 15 days x No. of years of service} / 26

ROLE OF AJA HR Services.

Being India’s leading HR and Payroll service provider, we atAJA HR Services. provide the best service and assistance along with a dedicated expert Consultant, who will ensure that you that all the compliances are made in accordance with the Payment of Gratuity Act, 1972.
Below is the list of service provided by us: –

• • Maintenance of following records and documents:
  • ✔ Notice of opening under Form A
  • ✔ Declaration under Form-F
  • ✔ Any other records and registers, as may be applicable under law, from time to time.
• • Proper and correct calculation of the gratuity amount, for the eligible Employees.
• • Assistance with payment of the amount under the payment of Ggratuity Aact, 1972.
• • Providing updated records and data during inspection under the Payment of Gratuity Act, 1972
• • Regularly updated and inform the employer about amendment/ changes in the Payment of Gratuity Act, 1972.

Get a 360-degree solution regarding all kind of roles and responsibilities on HR and Payroll process with the most trusted service from AJA HR Services.