Nominations for Gratuity: [Section 6]

Normally, the gratuity is paid to the employee by his employer, where his services are terminated due to any reason in his lifetime, but after the death of the said employee, the earned gratuity is to be paid to his successors and to avoid any type of complications and controversies, the provision of the nomination by the employee to get the gratuity, in case of his death is made. The provisions are as below:

Nomination by the employee after the completion of 1 year of service: 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.

Distribution of gratuity amount : An employee may, in his nomination, distribute the amount of gratuity payable to him under this Act amongst more than one nominee.

Nomination in favour of one or more family members: 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.

Nomination by the employee having no family/ subsequently acquiring family: 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.

Modification in nomination by the employee: 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 a manner as may be prescribed, of his intention to do so.

In the case of death of nominee: 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.

Nomination to kept by the employer: 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.

Procedure for Nomination:

1. Nomination form to be submitted in duplicate to the employer: A nomination shall be filled in Form ‘F’ and will be submitted in duplicate by personal service by the employee, after taking proper receipt or by sending through registered post acknowledgement due to the employer.

2. Submission of the form: In case of an employee who is already in employment for a year or more on the date of commencement of these rules, ordinarily, within ninety days from such date, and in case of an employee who completes one year of service after the date of commencement of these rules, ordinarily within thirty days of the completion of one year of service.

3. Acceptance of form beyond the specified time: Form ‘F’ filed with reasonable grounds for delay, shall be accepted by the employer after the specified time and no nomination so accepted shall be invalid because of the reason that it was filed after the specified period. [Rule 6(1)]

Within 30 days of the receipt of nomination in Form ‘F’, the employer shall get the service particulars of the employee, as mentioned in the form, verified with reference to the records of the establishment and return one copy to the employee, after obtaining a receipt thereof, the duplicate copy of Form ‘F’ duly attested by the employer or his authorized signatory and the other one shall be recorded for future in his office.[Rule 6(2)]

4. Period for submission of fresh nomination after acquiring a family: If an employee has no family at the time of his first nomination, then within 90 days of acquiring a family, he will submit a fresh nomination in duplicate on Form ‘G’ to the employer.[Rule 6(3)]

5. Notice of modification of nomination: A notice of modification of a nomination, including the case where the nominee predeceases an employee, shall be submitted in duplicate in Form ‘H’ to the employer. In both of cases as in (3) & (4), the rest procedure will be as mentioned in sub rule (1) & (2) shall apply.

6. Nomination duly signed by the employee: A nomination or a fresh nomination or a notice of modification of nomination shall be duly signed by the employee and if he is illiterate, shall bear the thumb impression of the employee in presence of two witnesses, who shall also sign a declaration to that effect in the nomination, fresh nomination or notice of modification of nomination, as the case may be, and it shall take effect from the date of receipt thereof by the employer.

Key Points: ♦ Gratuity shall be payable to an employee after rendering continuous services for not less than 5 years. ♦ Persons entitled to receive gratuity- (i) employee himself (ii) employee’s nominee, in case of his death (iii) employees’ heirs, if no nominees (iv) Nominees/ heirs if minor, gratuity shall be deposited to the Controlling Authority. ♦ Computation of gratuity: For every completed year of service or part thereof in excess of six months- The employer shall pay gratuity at the rate of 15 days wages. It is based on the rate of wages last drawn by an employee. ♦ Monthly rated employee- 15 days wages shall be calculated by – dividing the monthly rate of wages last drawn by 26 and multiplying the quotient by 15 ♦ Piece rated employee- daily wages shall be computed on the average of total wages received by him for a period of three months immediately preceding the termination of his employment. ♦ Employee in a seasonal establishment- where an employee who work only during the season is entitled for the gratuity at the rate of seven days wages for each season. ♦ The amount of gratuity payable to an employee shall not exceed ` 10 lakhs. ♦ Gratuity shall be paid within 30 days from the employer, in failure, the employer shall pay the simple interest on the gratuity amount from the date on which the gratuity becomes payable to the date on which it is paid. ♦ An employee who has completed 1 year of service, shall make nomination for the purpose of payment of gratuity in case of his death.