Latin word Gratuitous

Gratuity means a lump sum payment

made by an employer as the retrial reward
for his past service when his employment is
terminated

 Retiring benefit-Long and

Unblemished service

except

Shop and establishment covered under SHOPS

AND ESTABLISHMENT ACT- 10 or more persons immediately preceding to 12 months.
Once this act applies continue to be governed
irrespective of no of persons
It shall come into force on such date as the
central government may by notification , appoint

 Employee does not include- holds post

under central or state government
Teacher cannot be called as employee due to
amendment of this act

Continuous Service means uninterrupted

service which may be interrupted on
account of sickness , accident , leave ,
absence from duty without leave(not being
treated as break in service),lay-off , strike ,
lock-out or cessation of work not due to the
fault of the employee.
Whether such uninterrupted or interrupted
service was rendered before or after the
commencement of the Act

 If an employee is not in continuous service within

the meaning of CLASS-1 he shall deemed to be in
continuous service.
For a period of 1 year

190 Days, if the employee was employed

below the ground in a mine
190 Days ,if the employee was employed in
an establishment which works for less than 6
days in a week
240 Days, in any other case

For a period of 6 months :

95 Days , if the employee was
employed below the ground in a mine
95 Days , If the employee was employed
in an establishment which works for less
than 6 days in a week
120 Days , In any other case

Gratuity is payable when there is : Continuous service of 5 yrs(not necessary incase of

death or disablement)
Incase of death ,the amount shall be paid to
nominee or legal heir
Time limit- Within 30 days of gratuity
becoming payable
Maximum Amount-The gratuity payable to an
employee shall not exceed Rs. 10,00,000

It is mandatory where number of employees

more
than 500

The registration shall be done in

prescribed time & in prescribed manner

The insurance shall be taken from LIC or
any other prescribed insurance company
However , employer of an establishment
belonging to or under the control of CG or SG
are exempted from the operations of sec.4A.

 Every employee, who has completed 1 yr of service

, is compulsorily required to make a nomination
(Form F)
The nomination must be made within 30
days

The nomination must be made in favor of

one or more members of the
family(nomination shall be void if it is made
in favor of a person who is not a member of
his family)
If at the time of making nomination, the
employee does not have family, the
nomination may be made in favor of any
person
The employee may distribute the amount
of gratuity amongst more than one nominee

Application can be made by : An employee who is eligible for payment of

gratuity
Any person authorized in writing by such
employee
Nominee of the employee(if the deceased
employee had made a nomination)
Legal heir of the employee(if the deceased
employee had not made any nomination)

 If the employer fails to pay the gratuity within the

prescribed
time (i.e., within 30 days of
termination of employment) , the controlling authority is
empowered to issue a certificate to the collector to
recover the amount of Gratuity
The employer shall also be liable to pay
Compound interest at such rate as may be notified
by CG from time to time
The interest shall be paid from the date of expiry of
the prescribed period& ending with actual date of
payment of Gratuity
The interest payable shall not exceed the amount
of gratuity payable

OFFENCE
False statement to
avoid payment
Default in
complying with
Act
Non-payment of
Gratuity

PENALTY
6 months imprisonment or
Rs 10,000 or both
3 months-1 yr
imprisonment or Rs
20,000 or both
6 months-2 yrs
imprisonment

 Monthly Rated Employee

Piece rated
employee
Employee of a Seasonal

 Last drawn wages x 15/26 x Completed years

of
Service (incl. a part of year in excess of 6
months)
NOTE:
Wages = Last
drawn
Month = Period of 26
Days
15 days wages = Last drawn wages
x 15/26

 Last drawn wages x 15/26 x Completed

years of Service(incl. a part of year in
excess of 6 months)
NOTE:
Last drawn wages = Total wages received
during 3 months immediately preceding
termination/Days actually worked
Last drawn wages shall not include
overtime wages

 Such an employee shall be paid

gratuity at the rate of 7 days wages for
each season

PRESENTATION
ON
THE PAYMENT OF BONUS ACT,
1965

APPLICABILITY
The Act applies to(a) every factory; and
(b) every other establishment in which
twenty or more persons are employed on any
day during an accounting year.

Establishments to include departments,

undertakings and branches
Where an establishment consists of different
departments or undertakings or has branches,
whether situated in the same place or in different
places, all such departments or undertakings or
branches shall be treated as parts of the same
establishment for the purpose of computation of
bonus.

 Provided that where for any accounting year a

separate balance-sheet and profit and loss
account are prepared and maintained in respect
of any such department or undertaking or
branch, then, such department or undertaking
or branch shall be treated as a separate
establishment for the purpose of computation
of bonus, for that year.

 However employees of L.I.C., Universities

and Educational institutions, Hospitals,
Chamber of Commerce, R.B.I., IFCI, U.T.I.
Social Welfare institutions are not entitled to
bonus under this Act.

 The payment of Bonus Act provides for

payment of bonus to persons employed in
certain establishments of the basis of profits or
on the basis of production or productivity and
for matters connected therewith.

ELIGIBIITY FOR BONUS

Every employee receiving salary or wages up
to RS.10,000 p.m. and engaged in any kind of
work whether skilled, unskilled, managerial,
supervisory etc. is entitled to bonus for every
accounting year if he has worked for at least
30 working days in that year.

Salary Limit (Ceiling of Bonus)

Where the salary or wages of an
employee exceeds Rs.10,000 per
month, the bonus payable to such
employee shall be calculated as if his
salary or wages were Rs.10,000 per
month.

Salary or Wages " means all remuneration (other

than remuneration in respect of over-time work,
which would, be payable to an employee in respect
of his employment or of work done in such
employment and includes dearness allowance, but
does not include...
(i) any other allowance which the employee is for
the time being entitled to
(ii) the value of any house accommodation or of
supply of light, water, medical attendance or other
amenity or of any service or of any concessional
supply of food grains or other articles;

(iii) any travelling concession.

(iv) any bonus (including incentive, production
and attendance bonus)...
(v) any contribution paid or payable by the
employer to any pension fund or provident fund
or for the benefit of the employee.
(vi) any retrenchment compensation or any
gratuity or other retirement benefit payable to
the employee or any ex gratia payment made to
him.
(vii) any commission payable to the employee.

Computation of number of
working days
An employee shall be deemed to have worked in
an establishment in any accounting year also on
the days on which :
(a) he has been laid off under an agreement or as
permitted by standing orders under the Industrial
Employment (Standing Orders) Act, 1946, or
under the Industrial Disputes Act, 1947, or under
any other law applicable to the establishment;

(b) he has been on leave with salary or wages;

(c) he has been absent due to temporary
disablement caused by accident arising out of
and in the course of his employment, and
(d) the employee has been on maternity leave
with salary or wages, during the accounting
year.

DISQUALIFICATION FOR
BONUS
An employee shall be disqualified from
receiving bonus under this Act, if he is
dismissed from service for, fraud; or
Riotous or violent behavior while on the
premises of the establishment; or
theft, misappropriation or sabotage of any
property of the establishment.

Deduction of certain amounts from

bonus payable under the Act
Where in any accounting year, an employee is
found guilty of misconduct causing financial
loss to the employer, then, it shall be lawful for
the employer to deduct the amount of loss
from the amount of bonus payable by him to
the employee under this Act in respect of that
accounting year only and the employee shall
be entitled to receive the balance, if any.

MINIMUM AND MAXIMUM

BONUS PAYABLE
MINIMUM BONUS
The minimum bonus which an employer is required
to pay even if he suffers losses during the accounting
year or there is no allocable surplus is 8.33 % of the
salary during the accounting year, or
Rs. 100 in case of employees above 15 years and Rs
60 in case of employees below 15 years,
whichever is higher

MAXIMUM BONUS
If in an accounting year, the allocable surplus,
calculated after taking into account the amount
set on or the amount set of exceeds the
minimum bonus, the employer should pay
bonus in proportion to the salary or wages
earned by the employee in that accounting
year subject to a maximum of 20% of such
salary or wages.

TIME LIMIT FOR PAYMENT

The bonus should be paid in cash within 8
months from the close of the accounting year
or within one month from the date of
enforcement of the award or coming into
operation of a settlement following an
industrial dispute regarding payment of bonus.
However if there is sufficient cause extension
may be applied for.

CALCULATION OF BONUS
The method for calculation of annual bonus is
as follows:
1) Calculate the Available Surplus.

Available Surplus
Available Surplus = Gross Profit ( deduct) the
following :
Depreciation admissible u/s 32 of the Income
tax Act
Development allowance

RIGHTS OF EMPLOYER
Right to forfeit bonus of an employee, who has
been dismissed from service for fraud, riotous or
violent behavior, or theft, misappropriation or
sabotage of any property of the establishment.
Right to make permissible deductions from the
bonus payable to an employee, such as,
festival/interim bonus paid and financial loss
caused by misconduct of the employee.
Right to refer any disputes relating to application
or interpretation of any provision of the Act, to
the Labour Court or Labour Tribunal.

RIGHTS OF EMPLOYEES
Right to claim bonus payable under the Act and
to make an application to the Government, for the
recovery of bonus due and unpaid, within one
year of its becoming due.
Right to refer any dispute to the Labour
Court/Tribunal.
Employees, to whom the Payment of Bonus Act
does not apply, cannot raise a dispute regarding
bonus under the Industrial Disputes Act.
Right to seek clarification and obtain information,
on any item in the accounts of the establishment.

OFFENCES AND PENALTIES

For contravention of the provisions of the Act or
rules the penalty is imprisonment upto 6 months,
or fine up to Rs.1000, or both.
For failure to comply with the directions or
requisitions made the penalty is imprisonment
upto 6 months, or fine up to Rs.1000, or both.

 In case of offences by companies, firms, body

corporate or association of individuals, its
director, partner or a principal officer responsible
for the conduct of its business, shall be deemed to
be guilty of that offence, unless the person
concerned proves that the offence was committed
without his knowledge or that he exercised all
due diligence

 THE 1[KARNATAKA]1 INDUSTRIAL

ESTABLISHMENTS (NATIONAL AND FESTIVAL
HOLIDAYS) ACT, 1963 (Received the assent of the President
on the Twenty-sixth day of June, 1963.) (As amended by Act 1
of 1975, 7 of 1985, 16 of 1986 and 28 of 1997)
An Act to provide for the grant of national and festival holidays
to persons employed in industrial establishments in the 1[State
of Karnataka]1.
WHEREAS it is expedient to provide for the grant of national
and festival holidays to persons employed in industrial
establishments in the 1[State of Karnataka]1;
BE it enacted by the 1[Karnataka]1 State Legislature in the
Fourteenth Year of the Republic of India as follows:
1. Adapted by the Karnataka Adaptations of Laws Order 1973
w.e.f. 1.11.1973

 1. Short title, extent and commencement.(1) This

Act may be called the 1[Karnataka]1 Industrial
Establishments (National and Festival Holidays) Act,
1963.
1. Adapted by the Karnataka Adaptations of Laws Order
1973 w.e.f. 1.11.1973
(2) It extends to the whole of the 1[State of Karnataka]1.
1. Adapted by the Karnataka Adaptations of Laws Order
1973 w.e.f. 1.11.1973
(3) It shall come into force on such 1[date]1 as the State
Government may, by notification, appoint.
1. Act came into force w.e.f. 14.8.1963 by notification. Text
of the notification is at the end of the Act

THE KARNATAKA INDUSTRIAL ESTABLISHMENTS

(NATIONAL AND FESTIVAL HOLIDAYS) ACT, 1963
This act was designed to make formal rules to declare holidays
on national and festivals ,like independence day and republic
day etc.
As the Government of India have requested that appropriate
action should be taken to enforce the observance of National
and Festival Holidays.
as holidays with wages and in view of the great importance
attached to the National and some other important festivals, it
is considered necessary that our State should have legislation
in this behalf.

Amending Act 1 of 1975.

Under section 3 of the Mysore Industrial Establishments
(National and Festival Holidays) Act, 1963 every
employee is allowed two national holidays in a calendar
year on the 26th January and the 15th August.

It is proposed, as suggested by the National

Commission on Labour, to provide for another national
holiday on the 2nd October (Mahatma Gandhis
Birthday).
Under the proviso to sub-section (3) of section 5 of the
Act, an employee will not be entitled to be paid any
wages for any of the holidays allowed, if he has nor
completed period of thirty days continuous service
immediately preceding such holiday.

Amending Act 7 of 1985.

In his Budget Speech during 1982, the Chief Minister announced

Governments intention to declare the 1st day of May as a paid
holiday for industrial workers in the State.

Amending Act 16 of 1986.

The power conferred by section 6 of the Karnataka
Industrial Establishments (National and Festival
Holidays) Act, 1963 is, at present confined to the
appointment of Inspectors for local limits specified
by the State Government.
It is intended to take power to appoint Inspectors for
any given industrial establishment or class of such
establishments.

Amending Act 28 of 1997.On the suggestions of the Election

Commission, it is proposed to amend the Karnataka Industrial
Establishments (National and Festival Holidays) Act, 1963, to make it
obligatory on the part of employers to allow paid holiday to workers during
general or bye-elections for any parliamentary or Assembly Constituency
under the Representation of Peoples Act, 1951 (Central Act 43 of 1951) to
enable the employees to exercise their franchise.

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

(1) day means a period of twenty-four hours beginning at midnight;
(2) employee means,
(i) any person (including an apprentice) employed in any industrial
establishment to do any skilled or unskilled, manual, supervisory, technical
or clerical work for hire or reward, whether the terms of employment be
express or implied;
(ii) any other person employed in any industrial establishment whom the
State Government may, by notification, declare to be an employee for the
purposes of this Act;
(3) employer, when used in relation to an industrial establishment, means
a person who has the ultimate control over the affairs of any industrial
establishment and where the affairs of any industrial establishment are
entrusted to any other person (whether called a managing agent, manager,
superintendent or by any other name) such other person;

 industrial establishment means,

(i) any shop or commercial establishment as defined in clauses (e)
and (u) of section 2 of the 1[Karnataka]1 Shops and Commercial
Establishments Act, 1961;
1. Adapted by the Karnataka Adaptations of Laws Order 1973
w.e.f. 1.11.1973
(ii) any factory as defined in clause (m) of section 2 of the
Factories Act, 1948 (Central Act LXIII of 1948), or any place
which is deemed to be a factory under sub-section (2) of section 85
of that Act;
(iii) any plantation as defined in clause (f) of section 2 of the
Plantation Labour Act, 1951 (Central Act LXIX of 1951);
(iv) any other establishment which the State Government may, by
notification, declare to be an industrial establishment for the
purpose of this Act;

(5) Inspector means an Inspector appointed under sub-section (1) of section 6;

(6) notification means a notification published in the official Gazette;
(7) wages means all remuneration capable of being expressed in terms of money,
which would, if the terms of employment, express or implied, were fulfilled, be
payable to an employee in respect of his employment or of the work done by him in
such employment, and includes,
(i) such allowances (including dearness allowance) as the employee is for the time
being entitled to;
(ii) the value of any house accommodation, or of supply of light, water, medical
attendance or other amenity or of any service or of any concessional supply of
foodgrains or other articles;
but does not include,
(a) any bonus;
(b) any contribution paid or payable by the employer to any pension fund or provident
fund, or for the benefit of the employee under any law for the time being in force;
(c) any gratuity payable on the termination of his service;
(d) any sum paid to an employee to defray special expenses entailed on him by the
nature of his employment;
(e) any travelling concession.

 Grant of National and festival Holidays.

(1) Every employee shall be allowed in each calendar year, a
holiday of one whole day on the 26th January, 15th August,
2nd October and five other holidays each of one whole day for
such festivals as the employer may specify, from out of the list
of festivals specified in the Schedule appended to this Act in
consultation with the trade unions or in the absence of any
trade union in consultation with the employees or their
authorised representatives in such manner as may be
prescribed:
Provided that except in the case of Industrial establishments
owned or controlled by the Government of India, the number
of such other holidays shall be seven including first day of May
and first day of November.
(2) Whenever there is any disagreement between the
employer and employees or the trade Unions concerned as to
the festivals to be allowed as holidays during each calendar
year the employer or the employees of the concerned Trade
Union shall refer the dispute to the Inspector, having
jurisdiction over the area in which the Industrial establishment
is situated, for his decision and his decision shall be final.

 1[SCHEDULE
[See section 3]

LIST OF FESTIVALS
1. New Years Day
2. Bhogi Festival
3. Uttarayana Punyakala
(Sankranthi)
4. Kanu Festival
5. Tyagaraja Aradhana
6. Purandara Dasara
Punyadina
7. Garuda Jayanthi
8. Ratha Sapthami
9. Vyasa Poornima
10. Maha Shivarathri
11. Holi Festival
12. Holi Saturday

13. Good Friday

14. Shabh Barath
15. Chandramana Ugadi
16. Souramana Ugadi
17. Sriramanavami
18. Dr. Ambedkar Jayanthi
19. Mahaveera Jayanthi
20. May Day Celebration
21. Chitra Poornima
22. Shebe-E-Quader
23. Jumat-Ul-Vida
24. Sri Ramanujacharya Tiru
Nakshatra
25. Basava Jayanthi

26. Ramzan
27. Shankara Jayanthi
28. Buddha Poornima
29. Bakrid 9
30. Varamahalakshmi Vratha
31. Last Day of Mohram
32. Upakarma
33. Sri Krishna Jayanthi
34. Swarna Gowri Vratha
35. Ganesha Vratha
36. Thiru Onam
37. Ananthapadmanabha
Vratha
38. Mahalaya Amavasye

39. Mahanavami
40. Vijaya Dashami
41. Id-Milad
42. Thula Sankramana
43. Naraka Chathurdashi
44. Bali Padyami
45. Kannada Rajyotsava
46. Uttana Dwadasi
47. Gurunanak Jayanthi
48. Geetha Jayanthi
49. Shiva Deepa
50. Christmas Eve
51. Christmas
52. Madhva Navami.]