UNIT 3

1. Explain the procedure for calculation and determination of gratuity under

Payment of Gratuity Act 1972

Determination of the amount of gratuity

Section 7 of the Act, lays down the rules for the determination of the amount of
gratuity. The person entitled to receive the gratuity amount shall send an application in
writing to the employer. The employer shall calculate the gratuity amount and provide
notice in writing to the concerned employee and the controlling authority. The
payment should be made within 30 days from the date it is due to the employee.
Failure to pay within the prescribed limit will result in the payment of simple interest.
However, if the delayed payment is because of the employee, then the employer is not
entitled to pay the simple interest.

In the landmark case of Y.K. Singla v. Punjab National Bank (2012), the highest
Court in India, the Supreme Court had to decide whether an employee whose gratuity
has been withheld under Regulation 46 of the Punjab National Bank (Employees)
Pension Regulations is entitled to get interest because of the delay after the
completion of the proceeding? The Court held that even though the provisions of the
1995 Regulations are silent on the issue of payment of interest, the appellant would be
entitled to interest, on account of delayed payment under the Payment of Gratuity Act
for the benefit of the employee.

The disputes arising between the employee and employer shall be referred to the
controlling authority, and the proceedings for their resolution presided over by the
controlling authority shall be considered judicial proceedings. The controlling
authority has the authority to enforce the presence of any person and examine his oath,
order the production of relevant documents, and issue commissions for the
examination of witnesses if required. After due inquiry and giving the parties a
reasonable opportunity to be heard, the controlling authority may determine the
matters and pass appropriate orders. The aggrieved party can apply for appeals to the
government.

Calculation of gratuity

The elements that are used to determine the gratuity amount are listed below. The
amount also depends on how long an individual has worked for the organization and
when he was last paid.

Gratuity = Number of years * last drawn salary *15/26

For instance, if XYZ has been employed by a company for 20 years and
received Rs. 25,000 as his most recent basic plus DA amount,

For XYZ, the gratuity amount is equal to 20 * 25,000 * 15/26, or Rs.

2,88,461.54.

However, a company has the option of giving an employee a larger gratuity.

Additionally, for the number of months in the most recent employment year,
everything over six months is rounded up to the next number, and anything
under six months is rounded down to the previous lower number.
Employees not covered under the Act

The organisation may pay gratuities even if they are not covered by the Act.
But for each year that has passed, a person’s half-monthly wage is used to
determine how much gratuity they will receive. The pay package consists of a
base salary, a commission (depending on sales), and a depreciation allowance.

For employees who are not covered by the Gratuity Act, the following formula
is taken into account while calculating the gratuity amount:

(15 * last drawn salary amount * length of service) / 30 equals the gratuity
amount.

For instance, if you have worked for a company for 10 years and 8 months and
make Rs. 50,000, the gratuity amount is determined as follows:

Gratuity: (15 * 50,000 * 11) / 30 equals Rs. 2.75 lakh.

An employee’s tenure is counted as one year for purposes of calculation. The

previous number of completed years is taken into account if the number of
months worked in the most recent year is less than six months. However, the
year is regarded as a full year for the purposes of calculation if the number of
months completed in the most recent year of service is greater than six months.
Therefore, 11 years have been determined to be the working period. The
number of years of service would have been 10 years only if the service
duration had been 10 years and 4 months (or anything less than 6 months).

Gratuity in case of death of an employee

 Service tenure of the
Gratuity payable upon the death
employee

> a year 2 * basis salary of the employee

More than or equal to 1 year

6 * basis salary of the employee
but less than 5 years

More than or equal to 5 years

12 * basis salary of the employee
but less than 11 years

More than or equal to 11 years

20 * basis salary of the employee
but less than 20 years

For each full six-month term, half of the base salary. It is

More than or equal to 20 years
limited to a maximum of 33 times the basic salary, though.

2. Maternity Benefit Act, 1961 is a piece of legislation for providing health, safety
and welfare benefits to women employees. Critically Evaluate
The Maternity Benefit Act, 1961, is a law in India that ensures women employees
get maternity benefits like paid leave before and after childbirth. It aims to protect
the health and well-being of mothers and their newborns in the workplace.
The Maternity Benefit Act, 1961, is a landmark in Indian labor legislation,
prioritizing the rights and welfare of working women during pregnancy and post-
childbirth. The act reflects India’s commitment to safeguarding female workers’
employment rights during maternity. The Maternity (Amendment) Bill
2017, effective from April 1, 2017, introduced crucial changes, emphasizing the
Act’s support for working mothers.
Objectives of the Maternity Benefit Act, 1961
 Maternity Leave: The Act mandates that a woman employee is entitled to
maternity leave for a specified period before and after childbirth. The duration of
maternity leave is generally 26 weeks, which includes eight weeks before the
expected delivery date and eighteen weeks after childbirth.
 Payment during Maternity Leave: The Act requires employers to pay the
woman employee during the maternity leave period.
 Medical Bonus: The Act provides for a medical bonus to women employees in
addition to maternity leave. It is intended to cover medical expenses related to
pregnancy and childbirth.
 Prohibition from Work: During the maternity leave period, the employer is not
allowed to assign any work that is strenuous or involves long hours or standing,
which may adversely affect the health of the woman or the child.
 No Dismissal during Maternity Leave: The Act prohibits the dismissal of a
woman employee during the period of her maternity leave. It ensures job security
for women during the crucial period of pregnancy and childbirth.
 Right to Return to Work: The Act guarantees the right of a woman employee to
return to the same position or an equivalent position with the same pay and
benefits after the completion of her maternity leave.
 Facilities for Nursing: The Act recommends that employers provide facilities
for nursing mothers to feed their infants. This includes providing a creche facility
if the establishment has a certain number of women employees.
 Informing Women about Maternity Benefits: Employers are required to
inform women employees about the benefits available under the Maternity
Benefit Act, and they must display information related to maternity benefits in a
conspicuous place at the workplace.

Key Provisions of the Maternity Benefit Act, 1961

Section 4: Employment Restrictions
 Prohibits employing or working women for six weeks post-childbirth.
 Restricts demanding arduous work during pregnancy.
Section 5: Payment of Maternity Benefit
 Eligibility: Woman with 160 days of work in 12 months.
 Benefit Amount: Average daily wage for the preceding and following six weeks.
Section 7: Payment in Case of Death
Ensures payment to the nominee or legal representative in case the woman dies.
Section 8: Medical Bonus
 Eligibility: Every entitled woman.
 Payment: ₹1,000 if no pre-natal confinement and post-natal care is provided.
Section 9: Leave for Miscarriage
 Eligibility: Woman experiencing a miscarriage.
 Duration: Six weeks with prescribed proof.
Section 10: Leave for Illness
 Eligibility: Woman with illness from pregnancy-related conditions.
 Duration: Maximum one month with prescribed proof.
Section 11: Nursing Breaks
 Two breaks for nursing until the child is 15 months old.
 Duration and conditions prescribed by authorities.

Impact of the Maternity Benefit Act, 1961

 Increased Female Workforce: Boosts women’s confidence in pursuing careers.
 Improved Maternal Health: Provides proper medical care and rest.
 Enhanced Child Health: Supports breastfeeding and quality childcare.
 Reduced Discrimination: Diminishes workplace discrimination against
pregnant women.
 Cultural Shift: Contributes to a cultural shift valuing motherhood and gender
equality.

Challenges and Criticisms of the Maternity Benefit Act, 1961

 Exclusion of Sectors: Limited coverage excludes informal and self-employed
sectors.
 Duration of Maternity Leave: Some argue for an extension beyond the
mandated 12 weeks.
 Economic Burden: Small businesses may find compliance financially
burdensome.
 Limited Awareness and Enforcement: Increased awareness and strict
enforcement are needed.

Maternity Policies under Maternity Benefit Act

India, in its pursuit of women’s empowerment and workplace equality, has enacted
specific legislation to address maternity-related concerns. The Maternity Benefit
Act, 1961, is a pivotal piece of legislation that aims to provide women employees
with maternity benefits and job security during pregnancy and childbirth.
Simultaneously, the Companies Act, 2013, governs the functioning of companies
and plays a significant role in shaping corporate policies, including those related to
employee welfare.
1. Interplay between the Maternity Benefit Act and Companies Act
 Employee Welfare Policies: The Companies Act focuses on Corporate Social
Responsibility (CSR), encouraging companies to formulate policies that benefit
employees. Maternity benefits fall within the purview of such policies.
 Disclosures and Reporting: Companies are required to disclose their CSR
policies and activities in their annual reports under the Companies Act. This
includes initiatives supporting maternity benefits and the well-being of female
employees.

2. Impact on Corporate Culture

Compliance with the Maternity Benefit Act contributes to fostering a positive
corporate culture. It reflects a commitment to employee welfare, enhancing the
company’s reputation and attractiveness as an employer.
3. Board Composition
The Companies Act,2013 mandates certain compositions for boards, including the
appointment of independent directors. Boards, in their oversight role, may address
issues related to gender diversity and maternity benefits.

4. Challenges and Solutions

 Awareness and Implementation: Despite legal provisions, the challenge lies in
ensuring widespread awareness and effective implementation. Companies need to
prioritize disseminating information and fostering a culture that supports
maternity benefits.
 Integration with CSR Initiatives: Aligning maternity benefit programs with
broader CSR initiatives enhances their impact. Companies can integrate
initiatives supporting maternal health and child care into their CSR frameworks.

Conclusion
The Maternity Benefit Act, 1961, plays a crucial role in ensuring the rights and well-
being of women in the workforce during pregnancy and childbirth. While it has
significantly improved maternal and child health outcomes and boosted female
workforce participation, challenges such as making sure everyone knows about it
and making it work for all kinds of jobs still persists. It’s important for companies to
follow the Maternity Benefit Act and make sure everyone knows about it. This will
help promote fairness for women at work and make sure they get the support they
need during pregnancy.