THE PAYMENT OF GRATUITY ACT, 1972 
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ARRANGEMENT OF SECTIONS 
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SECTIONS 

1.  Short title, extent, application and commencement. 
2.  Definitions. 
2A. Continuous service. 
3.  Controlling authority. 
4.  Payment of gratuity. 
4A. Compulsory insurance. 
5.  Power to exempt. 
6.  Nomination. 
7.  Determination of the amount of gratuity. 
7A. Inspectors. 
7B. Powers of Inspectors. 
8.  Recovery of gratuity. 
9.  Penalties. 
10.  Exemption of employer from liability in certain cases. 
11.  Cognizance of offences. 
12.  Protection of action taken in good faith. 
13.  Protection of gratuity. 
14.  Act to override other enactments, etc. 
15.  Power to make rules. 

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THE PAYMENT OF GRATUITY ACT, 1972 

ACT NO. 39 OF 1972 

An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, 
mines, oilfields, plantations, ports, railway companies, shops or other establishments and for 
matters connected therewith or incidental thereto. 

BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:— 

1. Short title, extent, application and commencement.—(1) This Act may be called the Payment of 

[21st August, 1972.] 

Gratuity Act, 1972. 

(2) It extends to the whole of India: 

Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu 

and Kashmir*. 

(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.  

1[(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.] 

(4) It shall come into force on such date2 as the Central Government may, by notification, appoint. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “appropriate Government” means,— 

(i) in relation to an establishment— 

(a) belonging to, or under the control of, the Central Government, 

(b) having branches in more than one State, 

(c) of a factory belonging to, or under the control of, the Central Government, 

(d) of a major port, mine, oilfield or railway company, the Central Government, 

 (ii) in any other case, the State Government; 

(b) “completed year of service” means continuous service for one year;  

3[(c) “continuous service” means continuous service as defined in section 2A;] 

(d)  “controlling  authority”  means  an  authority  appointed  by  the  appropriate  Government  under 

section 3; 

1.  Ins. by Act 26 of 1984, s. 2 (w.e.f. 18-5-1984). 
2.16th September, 1972, vide notification No. S.O. 601(E), dated 16th September, 1972, see Gazette of India, Extraordinary, Part 

II, sec. 3(ii).  

3. Subs. by Act 26 of 1984, s. 3, for clause (c) and the Explanations (w.e.f. 18-5-1984). 
*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and 

Kashmir and the Union territory of Ladakh. 

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1[(e)  “employee”  means  any  person  (other  than  an  apprentice)  who  is  employed  for  wages, 
whether  the  terms  of  such  employment  are  express  or  implied,  in  any  kind  of  work,  manual  or 
otherwise,  in  or  in  connection  with  the  work  of  a  factory,  mine,  oilfield,  plantation,  port,  railway 
company, shop or other establishment to which this Act applies, but does not include any such person 
who holds a post under the Central Government or a State Government and is governed by any other 
Act or by any rules providing for payment of gratuity;] 

(f)  “employer”  means,  in  relation  to  any  establishment,  factory,  mine,  oilfield,  plantation,  port, 

railway company or shop— 

(i) belonging to, or under the control of, the Central Government or a State Government, a 
person or authority appointed by the appropriate Government for the supervision and control of 
employees, or where no person or authority has been so appointed, the head of the Ministry or the 
Department concerned, 

(ii) belonging to, or under the control of, any local authority, the person appointed by such 
authority for the supervision and control of employees or where no person has been so appointed, 
the chief executive officer of the local authority, 

(iii) in any other case, the person, who, or the authority which, has the ultimate control over 
the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, 
and where the said affairs are entrusted to any other person, whether called a manager, managing 
director or by any other name, such person; 

(g) “factory” has the meaning assigned to it in clause (m) of section 2 of the Factories Act, 1948 

(63 of 1948); 

(h) “family”, in relation to an employee, shall be deemed to consist of— 

(i)  in  the  case  of  a  male  employee,  himself,  his  wife,  his  children,  whether  married  or 
unmarried,  his  dependent  parents  2[and  the  dependent  parents  of  his  wife  and  the  widow]  and 
children of his predeceased son, if any, 

(ii) in the case of a female employee, herself, her husband, her children, whether married or 
unmarried, her dependent parents and the dependent parents of her husband and the widow and 
children of her predeceased son, if any: 

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Explanation.—Where  the  personal  law  of  an  employee  permits  the  adoption  by  him  of  a 
child, any child lawfully adopted by him shall be deemed to be included in his family, and where 
a  child  of  an  employee  has  been  adopted  by  another  person  and  such  adoption  is,  under  the 
personal  law  of  the  person  making  such  adoption,  lawful,  such  child  shall  be  deemed  to  be 
excluded from the family of the employee; 

(i) “major port” has the meaning assigned to it in clause (8) of section 3 of the Indian Ports Act, 

1908 (15 of 1908); 

(j) “mine” has the meaning assigned to it in clause (j) of sub-section (1) of section 2 of the Mines 

Act, 1952 (35 of 1952); 

4[(k)  “notification”  means  a  notification  published  in  the  Official  Gazette  and  the  expression 

“notified” shall be construed accordingly]; 

(l) “oilfield” has the meaning assigned to it in clause (e) of section 3 of the Oilfields (Regulation 

and Development) Act, 1948 (53 of 1948); 

1. Subs. by Act 47 of 2009, s. 2, for clause (e) (w.e.f. 3-4-1997). 
2. Subs. by Act 22 of 1987, s. 2, for “and the widow” (w.e.f. 1-10-1987). 
3. The proviso omitted by s. 2, ibid. (w.e.f. 1-10-1987).  
4. Subs. by Act 12 of 2018, s. 2, for clause (k) (w.e.f. 29-3-2018). 

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(m) “plantation” has the meaning assigned to it in clause (f) of section 2 of the PlantationsLabour 

Act, 1951 (69 of 1951); 

(n) “port” has the meaning assigned to it in clause (4) of section 3 of the Indian Ports Act, 1908 

(15 of 1908); 

(o) “prescribed” means prescribed by rules made under this Act; 

(p)  “railway  company”  has  the  meaning  assigned  to  it  in  clause  (5)  of  section  3  of  the  Indian 

Railways Act, 1890 (9 of 1890); 

(q)  “retirement”  means  termination  of  the  service  of  an  employee  otherwise  than  on 

superannuation; 

1[(r) “superannuation”, in relation to an employee, means the attainment by the employee of such 
age  as  is  fixed  in  the  contract  or  conditions  of  service  as  the  age  on  the  attainment  of  which  the 
employee shall vacate the employment;] 

(s) “wages” means all emoluments which are earned by an employee while on duty or on leave in 
accordance with the terms and conditions of his employment and which are paid or are payable to him 
in  cash  and  includes  dearness  allowance  but  does  not  include  any  bonus,  commission,  house  rent 
allowance, overtime wages and any other allowance. 

2[2A. Continuous service.—For the purposes of this Act,— 

(1) an employee shall be said to be in continuous service for a period if he has, for that period, 
been  in  uninterrupted  service,  including  service  which  may  be  interrupted  on  account  of  sickness, 
accident, leave, absence from duty without leave (not being absence in respect of which an order 3*** 
treating the absence as break in service has been passed in accordance with the standing orders, rules 
or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation 
of work not due to any fault of the employee, whether such uninterrupted or interrupted service was 
rendered before or after the commencement of this Act; 

(2) where an employee (not being an employee employed in a seasonal establishment) is not in 
continuous service within the meaning of clause (1), for any period of one year or six months, he shall 
be deemed to be in continuous service under the employer— 

(a)  for  the  said  period  of  one  year,  if  the  employee  during  the  period  of  twelve  calendar 
months preceding the date with reference to which calculation is to be made, has actually worked 
under the employer for not less than— 

(i) one hundred and ninety days, in the case of an employee employed below the ground 

in a mine or in an establishment which works for less than six days in a week; and  

(ii) two hundred and forty days, in any other case; 

(b)  for  the  said  period  of  six  months,  if  the  employee  during  the  period  of  six  calendar 
months  preceding  the  date  with  reference to  which  the  calculation  is to  be  made,  has  actually 
worked under the employer for not less than— 

(i) ninety-five days, in the case of an employee employed below the ground in a mine or 

in an establishment which works for less than six days in a week; and  

(ii) one hundred and twenty days, in any other case. 

1. Subs. by Act 25 of 1984, s. 2, for clause (r) (w.e.f. 1-7-1984). 
2. Ins. by Act 26 of 1984, s. 4 (w.e.f. 18-5-1984). 
3. The words “imposing a punishment or penalty or” omitted by Act 22 of 1987, s. 3 (w.e.f. 1-10-1987). 

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1[Explanation.—For  the  purposes  of  clause  (2),  the  number  of  days  on  which  an  employee 

has actually worked under an employer shall include the days on which— 

(i)  he  has  been  laid-off  under  an  agreement  or  as  permitted  by  standing  orders  made 
under  the  Industrial  Employment  (Standing  Orders)  Act,  1946  (20  of  1946),  or  under  the 
Industrial  Disputes  Act,  1947  (14  of  1947),  or  under  any  other  law  applicable  to  the 
establishment; 

(ii) he has been on leave with full wages, earned in the previous year; 

(iii) he has been absent due to temporary disablement caused by accident arising out of 

and in the course of his employment; and 

(iv) in the case of a female, she has been on maternity leave; so, however, that the total 
period  of  such  maternity  leave  does  not  exceed  2[such  period  as  may  be  notified  by  the 
Central Government from time to time];] 

(3) where an employee, employed in a seasonal establishment, is not in continuous service within 
the  meaning  of  clause  (1),  for  any  period  of  one  year  or  six  months,  he  shall  be  deemed  to  be  in 
continuous  service  under  the  employer  for  such  period  if  he  has  actually  worked  for  not  less  than 
seventy-five per cent. of the number of days on which the establishment was in operation during such 
period.] 

3. Controlling authority.—The appropriate Government may, by notification, appoint any officer to 
be  a  controlling  authority,  who  shall  be  responsible  for  the  administration  of  this  Act  and  different 
controlling authorities may be appointed for different areas. 

4.  Payment  of  gratuity.—(1)  Gratuity  shall  be  payable  to  an  employee  on  the  termination  of  his 

employment after he has rendered continuous service for not less than five years,— 

(a) on his superannuation, or 

(b) on his retirement or resignation, or 

(c) on his death or disablement due to accident or disease: 

Provided  that  the  completion  of  continuous  service  of  five  years  shall  not  be  necessary  where  the 

termination of the employment of any employee is due to death or disablement:  

3[Provided further that in the case of death of the employee, gratuity payable to him shall be paid to 
his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a 
minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same 
for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such 
minor attains majority.] 

Explanation.—For the purposes of this section, disablement means such disablement as incapacitates 
an employee for the work which he was capable of performing before the accident or disease resulting in 
such disablement. 

(2) For every completed year of service or  part thereof in excess of six months, the employer shall 
pay gratuity to an employee at the rate of fifteen days’ wages based on the rate of wages last drawn by the 
employee concerned: 

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of 
the total wages received by him for a period of three months immediately preceding the termination of his 
employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:  

1. Explanation inserted by Act 22 of 1987, s. 3 (w.e.f. 1-10-1987). 
2. Subs. by Act 12 of 2018, s. 3, for “twelve weeks” (w.e.f. 29-3-2018). 
3. Subs. by Act 22 of 1987, s. 4, for the second proviso (w.e.f. 1-10-1987).  

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Provided further that in the case of  1[an employee who is employed in a seasonal establishment and 
who is not so employed throughout the year], the employer shall pay the gratuity at the rate of seven days’ 
wages for each season.  

2[Explanation.—In the case of a monthly rated employee, the fifteen days’ wages shall be calculated 
by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by 
fifteen.] 

(3)  The  amount  of  gratuity  payable  to  an  employee  shall  not  exceed  3[  4[such  amount  as  may  be 

notified by the Central Government from time to time] ]. 

(4)  For  the  purpose  of  computing  the  gratuity  payable  to  an  employee  who  is  employed,  after  his 
disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be 
the wages received by him during that period, and his wages for the period subsequent to his disablement 
shall be taken to be the wages as so reduced. 

(5) Nothing in this section shall affect the right of an employee receive better terms of gratuity under 

any award or agreement or contract with the employer. 

(6) Notwithstanding anything contained in sub-section (1),— 

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission 
or negligence causing any damage or loss to, or destruction of, property belonging to the employer, 
shall be forfeited to the extent of the damage or loss so caused; 

(b) the gratuity payable to an employee 5[may be wholly or partially forfeited]— 

(i) if the services of such employee have been terminated for his riotous or disorderly conduct 

or any other act violence on his part, or 

(ii)  if  the  services  of  such  employee  have  been  terminated  for  any  act  which  constitutes  an 
offence involving moral turpitude, provided that such offence is committed by him in the course of 
his employment.  

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7[4A. Compulsory insurance.—(1) With effect from such date as may be notified by the appropriate 
Government in this behalf, every employer, other than an employer or an establishment belonging to, or 
under the control of, the Central Government or a State Government, shall, subject to the provisions of 
sub-section (2),  obtain  an  insurance  in  the  manner  prescribed,  for  his  liability  for  payment  towards  the 
gratuity under this Act, from the Life Insurance Corporation of India established under the Life Insurance 
Corporation of India Act, 1956 (31 of 1956) or any other prescribed insurer: 

Provided that different dates may be appointed for different establishments or class of establishments 

or for different areas. 

(2) The appropriate Government may, subject to such conditions as may be prescribed, exempt every 
employer  who  had  already  established  an  approved  gratuity  fund  in  respect  of  his  employees  and  who 
desires to continue such arrangement, and every employer employing five hundred or more persons who 
establishes an approved gratuity fund in the manner prescribed from the provisions of sub-section (1). 

(3) For the purpose of effectively implementing the provisions of this section, every employer shall 
within such time as may be prescribed get his establishment registered with the controlling authority in 
the prescribed manner and no employer shall be registered under the provisions of this section unless he 

1. Subs. by Act 25 of 1984, s. 3, for “an employee employed in a seasonal establishment” (w.e.f. 1-7-1984). 
2. Explanation inserted by Act 22 of 1987, s. 4 (w.e.f. 1-10-1987). 
3. Subs. by Act 15 of 2010, s. 2, for “three lakhs and fifty thousand rupees” (w.e.f. 24-5-2010). 
4. Subs. by Act 12 of 2018, s. 4, for “ten lakh rupees” (w.e.f. 29-3-2018). 
5. Subs. by Act 25 of 1984, s. 3, for “shall be wholly forfeited” (w.e.f. 1-7-1984). 
6. Sub-section (7) omitted by Act 34 of 1994, s. 3 (w.e.f. 24-5-1994). 
7. Ins. by Act 22 of 1987, s. 5. 

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has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred 
to in sub-section (2). 

(4) The appropriate Government may, by notification, make rules to give effect to the provisions of 
this  section  and  such  rules  may  provide  for  the  composition  of  the  Board  of  Trustees  of  the  approved 
gratuity fund and for the recovery by the controlling authority of the amount of the gratuity payable to an 
employee from the Life Insurance Corporation of India or any other insurer with whom an insurance has 
been taken under sub-section (1), or as the case may be, the Board of Trustees of the approved gratuity 
fund. 

(5) Where an employer fails to make any payment by way of premium to the insurance referred to in 
sub-section (1) or by way of contribution to an approved gratuity fund referred to in sub-section (2), he 
shall  be  liable  to  pay  the  amount  of  gratuity  due  under  this  Act  (including  interest,  if  any,  for  delayed 
payments) forthwith to the controlling authority. 

(6) Whoever contravenes the provisions of  sub-section (5) shall be punishable with fine which may 
extend  to  ten  thousand  rupees  and  in  the  case  of  a  continuing  offence  with  a  further  fine  which  may 
extend to one thousand rupees for each day during which the offence continues. 

Explanation.—In this section “approved gratuity fund” shall have the same meaning as in clause (5) 

of section 2 of the Income-tax Act, 1961 (43 of 1961).] 

5. Power to exempt.—1[(1)] The appropriate Government may, by notification, and subject to such 
conditions  as  may  be  specified  in  the  notification,  exempt  any  establishment,  factory,  mine,  oilfield, 
plantation, port, railway company or shop to which this Act applies from the operation of the provisions 
of this Act if, in the opinion of the appropriate Government, the employees in such establishment, factory, 
mine, oilfield, plantation, port, railway company or shop are in receipt of gratuity or pensionary benefits 
not less favourable than the benefits conferred under this Act.  

2[(2)  The  appropriate  Government  may,  by  notification  and  subject  to  such  conditions  as  may  be 
specified in the notification, exempt any employee or class of employees employed in any establishment, 
factory,  mine,  oilfield,  plantation,  port,  railway  company  or  shop  to  which  this  Act  applies  from  the 
operation of the provisions of this Act, if, in the opinion of the appropriate Government, such employee or 
class of employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits 
conferred under this Act.]  

3[(3)  A  notification  issued  under  sub-section  (1)  or  sub-section  (2)  may  be  issued  retrospectively  a 
date not earlier than the date of commencement of this Act, but no such notification shall be issued so as 
to prejudicially affect the interests of any person.]  

6. Nomination.—(1) Each employee, who has completed one year of service, shall make, within such 
time, in such form and in such manner, as may be prescribed, nomination for the purpose of the second 
proviso to sub-section (1) of section 4. 

(2) An employee may, in his nomination, distribute the amount of gratuity payable to him under this 

Act amongst more than one nominee. 

(3) If an employee has a family at the time of making a nomination, the nomination shall be made in 
favour of one or more members of his family, and any nomination made by such employee in favour of a 
person who is not a member of his family shall be void. 

(4) If at the time of making a nomination the employee has no family, the nomination may be made in 
favour  of  any  person  or  persons  but  if  the  employee  subsequently  acquires  a  family,  such  nomination 
shall forthwith  become  invalid  and the  employee  shall  make,  within such  time  as  may  be  prescribed, a 
fresh nomination in favour of one or more members of his family. 

1. Section 5 renumbered as sub-section (1) thereof by Act 26 of 1984, s. 5 (w.e.f. 18-5-1984). 
2. Ins. by s. 5, ibid. (w.e.f. 18-5-1984). 
3. Ins. by Act 22 of 1987, s. 6 (w.e.f. 1-10-1987). 

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(5)  A  nomination  may,  subject  to  the  provisions  of  sub-sections  (3)  and  (4),  be  modified  by  an 
employee at any time, after giving to his employer a written notice in such form and in such manner as 
may be prescribed, of his intention to do so. 

(6) If a nominee predeceases the employee, the interest of the nominee shall revert to the employee 

who shall make a fresh nomination, in the prescribed form, in respect of such interest. 

(7) Every nomination, fresh nomination or alteration of nomination, as the case may be, shall be sent 

by the employee to his employer, who shall keep the same in his safe custody. 

7. Determination of the amount of gratuity.—(1) A person who is eligible for payment of gratuity 
under this Act or any person authorised, in writing, to act on his behalf shall send a written application to 
the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. 

(2)  As  soon  as  gratuity  becomes  payable,  the  employer  shall,  whether  an  application  referred  to  in 
sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the 
person  to  whom  the  gratuity  is  payable  and  also  to  the  controlling  authority  specifying  the  amount  of 
gratuity so determined.  

1[(3)  The  employer  shall  arrange  to  pay  the  amount  of  gratuity  within  thirty  days  from  the  date  it 

becomes payable to the person to whom the gratuity is payable. 

(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the 
period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes 
payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the 
Central Government from time to time for repayment of long-term deposits, as that Government may, by 
notification specify: 

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the 
employee  and  the  employer  has  obtained  permission  in  writing  from  the  controlling  authority  for  the 
delayed payment on this ground.] 

(4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as 
to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the 
person  entitled  to  receive  the  gratuity,  the  employer  shall  deposit  with  the  controlling  authority  such 
amount as he admits to be payable by him as gratuity.  

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3[(b)  Where  there  is  a  dispute  with  regard  to  any  matter  or  matters  specified  in  clause  (a),  the 
employer or employee or any other person raising the dispute may make an application to the controlling 
authority for deciding the dispute.]  

4[(c)  The  controlling  authority  shall,  after  due  inquiry  and  after  giving  the  parties  to  the  dispute  a 
reasonable  opportunity  of  being  heard,  determine  the  matter  or  matters  in  dispute  and  if,  as  a  result  of 
such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the 
employer  to  pay  such  amount  or,  as  the  case  may  be,  such  amount  as  reduced  by  the  amount  already 
deposited by the employer.]  

5[(d)] The controlling authority shall pay the amount deposited, including the excess amount, if any, 

deposited by the employer, to the person entitled thereto.  

6[(e)] As soon as may be after a deposit is made under clause (a), the controlling authority shall pay 

the amount of the deposit— 

(i) to the applicant where he is the employee; or 

1. Subs. by Act 22 of 1987, s. 7, for sub-section (3) (w.e.f. 1-10-1987). 
2. The Explanation omitted by Act 25 of 1984, s. 4 (w.e.f. 1-7-1984). 
3.  Ins. by s. 4, ibid. (w.e.f. 1-7-1984). 
4. Subs. by s. 4, ibid., for clause (c) (w.e.f. 1-7-1984). 
5. Clause (c) re-lettered as clause (d) thereof by s. 4, ibid. (w.e.f. 1-7-1984). 
6. Clause (d) re-lettered  as clause (e) thereof by s. 4, ibid. (w.e.f. 1-7-1984). 

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(ii) where the applicant is not the employee, to the 1[nominee or, as the case may be, the guardian 
of  such  nominee  or]  heir  of  the  employee  if  the  controlling  authority  is  satisfied  that  there  is  no 
dispute as to the right of the applicant to receive the amount of gratuity. 

(5)  For  the  purpose  of  conducting  an  inquiry  under  sub-section  (4),  the  controlling  authority  shall 
have  the  same  powers as  are  vested in  a  court,  while  trying  a  suit,  under  the  Code  of  Civil  Procedure, 
1908 (5 of 1908), in respect of the following matters, namely:— 

(a) enforcing the attendance of any person or examining him on oath; 

(b) requiring the discovery and production of documents; 

(c) receiving evidence on affidavits; 

(d) issuing commissions for the examination of witnesses. 

(6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 

and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860). 

(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of 
the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be 
specified by the appropriate Government in this behalf: 

Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is 
satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said 
period of sixty days, extend the said period by a further period of sixty days:  

2[Provided further that no appeal by an employer shall be admitted unless at the time of preferring the 
appeal,  the  appellant  either  produces  a  certificate  of  the  controlling  authority  to  the  effect  that  the 
appellant  has  deposited  with  him  an  amount  equal  to  the  amount  of  gratuity  required  to  be  deposited 
under sub-section (4), or deposits with the appellate authority such amount.] 

(8) The appropriate Government or the appellate authority, as the case may be, may, after giving the 
parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of 
the controlling authority. 

3[7A.  Inspectors.—(1)  The  appropriate  Government  may,  by  notification,  appoint  as  many 

Inspectors, as it deems fit, for the purposes of this Act. 

(2)  The  appropriate  Government  may,  by  general  or  special  order,  define  the  area  to  which  the 
authority of an Inspector so appointed shall extend and where two or more Inspectors are appointed for 
the same area, also provide by such order, for the distribution or allocation of work to be performed by 
them under this Act. 

(3) Every Inspector shall be deemed to be a public servant within the meaning of section 21 of the 

Indian Penal Code (45 of 1860). 

7B.  Powers  of  Inspectors.—(1)  Subject  to  any  rules  made  by  the  appropriate  Government  in  this 
behalf, an Inspector may, for the purpose of ascertaining whether any of the provisions of this Act or the 
conditions, if any, of any exemption granted thereunder, have been complied with, exercise all or any of 
the following powers, namely:— 

(a) require an employer to furnish such information as he may consider necessary; 

(b) enter and inspect, at all reasonable hours, with such assistants (if any), being persons in the 
service of the Government or local or any public authority, as he thinks fit, any premises of or place 
in any factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which 
this  Act,  applies,  for  the  purpose  of  examining  any  register,  record  or  notice  or  other  document 
required  to  be  kept  or  exhibited  under  this  Act  or  the  rules  made  thereunder,  or  otherwise  kept  or 

1. Subs. by Act 25 of 1984, s. 4, for “nominee” (w.e.f. 1-7-1984). 
2. The proviso ins. by s. 4, ibid.  (w.e.f. 1-7-1984). 
3. Ins. by s. 5, ibid. (w.e.f. 1-7-1984). 

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exhibited in relation to the employment of any person or the payment of gratuity to the employees, 
and require the production thereof for inspection; 

(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer or 
any person whom he finds in such premises or place and who, he has reasonable cause to believe, is 
an employee employed therein; 

(d)  make  copies  of, or take  extracts  from,  any  register, record, notice  or  other document,  as  he 
may consider relevant, and where he has reason to believe that any offence under this Act has been 
committed by an employer, search and seize with such assistance as he may think fit, such register, 
record, notice or other document as he may consider relevant in respect of that offence; 

(e) exercise such other powers as may be prescribed. 

(2)  Any  person  required  to  produce  any  register,  record,  notice  or  other  document  or  to  give  any 
information by an Inspector under sub-section (1) shall be deemed to be legally bound to do so within the 
meaning of sections 175 and 176 of the Indian Penal Code (45 of 1860). 

(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall so far as may be, apply 
to any search or seizure under this section as they apply to any search or seizure made under the authority 
of a warrant issued under section 94 of that Code.] 

8.  Recovery  of  gratuity.—If  the  amount  of  gratuity  payable  under  this  Act  is  not  paid  by  the 
employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an 
application  made  to  it  in  this  behalf  by  the  aggrieved  person,  issue  a  certificate  for  that  amount  to  the 
Collector,  who  shall  recover  the  same,  together  with  compound  interest  thereon  1[at  such  rate  as  the 
Central  Government  may,  by  notification,  specify],  from  the  date  of  expiry  of  the  prescribed  time,  as 
arrears of land revenue and pay the same to the person entitled thereto:  

2[Provided that the controlling authority shall, before issuing a certificate under this section, give the 

employer a reasonable opportunity of showing cause against the issue of such certificate: 

Provided  further that  the  amount  of  interest  payable under this  section  shall,  in  no  case  exceed  the 

amount of gratuity payable under this Act.] 

9. Penalties.—(1) Whoever, for the purpose of avoiding any payment to be made by himself under 
this Act or of enabling any other person to avoid such payment, knowingly makes or causes to be made 
any false statement or false representation shall be punishable with imprisonment for a term which may 
extend to six months, or with fine which may extend to 3[ten thousand rupees], or with both. 

(2) An employer who contravenes, or makes default in complying with, any of the provisions of this 
Act or any rule or order made thereunder shall be punishable with imprisonment for a term  4[which shall 
not be less than three months but which may extend to one year, or with fine which shall not be less than 
ten thousand rupees but which may extend to twenty thousand rupees, or with both]: 

Provided that  where  the  offence  relates to  non-payment  of  any  gratuity  payable under  this  Act,  the 
employer shall be punishable with imprisonment for a term which shall not be less than  5[six months but 
which may extend to two years] unless the court trying the offence, for reasons to be recorded by it in 
writing, is of opinion that a lesser term of imprisonment or the imposition of a fine would meet the ends 
of justice. 

10. Exemption of employer from liability in certain cases.—Where an employer is charged with an 
offence punishable under this Act, he shall be entitled, upon complaint duly made by him and on giving 
to the complainant not less than three clear days' notice in writing of his intention to do so, to have any 
other person whom he charges as the actual offender brought before the court at the time appointed for 

1. Subs. by Act 22 of 1987, s. 8, for “at the rate of nine per cent. per annum” (w.e.f. 1-10-1987). 
2. The provisos inserted by s. 8, ibid. (w.e.f. 1-10-1987). 
3. Subs. by s. 9, ibid., for “one thousand rupees” (w.e.f. 1-10-1987). 
4. Subs. by s. 9, ibid., for certain words (w.e.f. 1-10-1987). 
5. Subs. by s. 9, ibid., for “three months” (w.e.f. 1-10-1987). 

10 

 
                                                           
hearing the charge; and if, after the commission of the offence has been proved, the employer proves to 
the satisfaction of the court— 

(a) that he has used due diligence to enforce the execution of this Act, and 

(b) that the said other person committed the offence in question without his knowledge, consent 

or connivance,  

that other person shall be convicted of the offence and shall be liable to the like punishment as if he were 
the employer and the employer shall be discharged from any liability under this  Act in respect of such 
offence: 

Provided  that  in  seeking  to  prove  as  aforesaid,  the  employer  may  be  examined  on  oath  and  his 
evidence and that of any witness whom he calls in his support shall be subject to cross-examination on 
behalf of the person he charges as the actual offender and by the prosecutor: 

Provided further that, if the person charged as the actual offender by the employer cannot be brought 
before the court at the time appointed for hearing the charge, the court shall adjourn the hearing from time 
to time for a period not exceeding three months and if by the end of the said period the person charged as 
the  actual  offender  cannot  still  be  brought  before  the  court,  the  court  shall  proceed  to  hear  the  charge 
against the employer and shall, if the offence be proved, convict the employer. 

11.  Cognizance  of  offences.—(1)  No  court  shall  take  cognizance  of  any  offence  punishable  under 

this Act save on a complaint made by or under the authority of the appropriate Government: 

Provided that where the amount of gratuity has not been paid, or recovered, within six months from 
the expiry of the prescribed time, the appropriate Government shall authorise the controlling authority to 
make  a  complaint  against  the  employer,  whereupon  the  controlling  authority  shall,  within  fifteen  days 
from  the  date  of  such  authorisation,  make  such  complaint  to a  magistrate  having  jurisdiction to  try  the 
offence. 

(2) No court inferior to that of a 1[Metropolitain magistrate or a Judicial Magistrate of the first class] 

shall try any offence punishable under this Act. 

12. Protection of action taken in good faith.—No suit or other legal proceeding shall lie against the 
controlling authority or any other person in respect of anything which is in good faith done or intended to 
be done under this Act or any rule or order made thereunder. 

13.  Protection  of  gratuity.—No  gratuity  payable  under  this  Act  2[and  no  gratuity  payable  to  an 
employee  employed  in  any  establishment,  factory,  mine,  oilfield,  plantation,  port,  railway  company  or 
shop exempted under section 5] shall be liable to attachment in execution of any decree or order of any 
civil, revenue or criminal court.  

14. Act to override other enactments, etc.—The provisions of this Act or any rule made thereunder 
shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than 
this Act or in any instrument or contract having effect by virtue of any enactment other than this Act. 

15. Power to make rules.—(1) The appropriate Government may, by notification, make rules for the 

purpose of carrying out the provisions of this Act. 

(2) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it 
is made, before each House of Parliament while it is in session, for a total period of thirty days which may 
be comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately following the session or the successive sessions aforesaid, both Houses agree in making any 
modification in the rule or both Houses agree that the rule should not be made, the rule shall, thereafter, 
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such 
modification or annulment shall be without prejudice to the validity of anything previously done under 
that rule. 

1. Subs. by Act 34 of 1994, s. 4, for “Presidency Magistrate or a Magistrate of the first class” (w.e.f. 24-5-1994). 
2. Ins. by Act 25 of 1984, s. 6 (w.e.f. 1-7-1984). 

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