The KERALA INDUSTRIAL EMPLOYEES' PAYMENT OF GRATUITY ACT, 1970

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THE KERALA INDUSTRIAL EMPLOYEES' PAYMENT OF 
GRATUITY ACT, 1970
(Act 6 of 1970)
CONTENTS
Preamble.
Sections:
1. Short title, extent and application.
2. Definitions.
3. Controlling Authority.
4. Payment of gratuity.
5. Power to exempt.
6. Nomination.
7. Application for gratuity and procedure for payment.
8. Recovery of gratuity amount.
9. Penalties.
10. Protection for acts done in good faith.
11. Delegation of powers.
12. Power to make rules.
13. Repeal and Saving.
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ACT 6 OF 1970
THE KERALA INDUSTRIAL EMPLOYEES' PAYMENT OF
GRATUITY ACT, 1970*
An Act to provide for the payment of gratuity to the employees in factories, plantations and
other establishments in the State of Kerala.
Preamble.—WHEREAS it is expedient to provide for the payment of gratuity to the
employees in factories, plantations and other establishments in the State of Kerala;
BE it enacted in the Twenty-first Year of the Republic of India as follows:—
1. Short title, extent and application .—(1) This Act may be called the Kerala Industrial
Employees' Payment of Gratuity Act, 1970.
(2) It extends to the whole of the State of Kerala.
(3) It shall apply in the first instance to—
(a) any factory as defined in clause (m) of section 2 of the Factories Act, 1948
(Central Act 63 of 1948);
(b) any plantation as defined in clause (f) of section 2 of the Plantations Labour
Act, 1951 (Central Act 69 of 1951) which admeasures 10.125 hectares or more or in which
ten or more persons are employed on the date of the commencement of this Act;
(c) any establishment as defined in clause (8) of section 2 of the Kerala Shops
and Commercial Establishments Act, 1960 (34 of 1960);
(d) any establishment as defined in clause (h) of section 2 of the Beedi and Cigar
Workers (Conditions of Employment) Act, 1966 (Central Act 32 of 1966) where ten or more
persons are employed;
(e) any motor transport undertaking as defined in clause (g) of section 2 of the
Motor Transport Workers Act, 1961 (Central Act 27 of 1961):
Provided that the Government may, after giving not less than two months' notice of its
intention so to do, by notification in the Gazette, apply the provisions of this Act to any other
factory, plantation, establishment or undertaking to which the provisions of this Act as such
do not apply.
2. Definitions.—In this Act, unless the context otherwise requires—
(a)  “completed  year  of  service”  means  uninterrupted  service  for  one  year  and
includes service which may be interrupted by sickness, accident, leave, strike, lock-out or
cessation of work not due to employee's fault;
* Received the assent of the Governor on the 17 th day of February, 1970 and published in the Kerala Gazette
Extraordinary No.63, dated 18th  February, 1970.
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(b) “continuous service” means uninterrupted service and includes service which
may be interrupted by sickness, accident, leave, strike, lock-out or cessation of work not due
to employee's fault;
(c) “controlling authority” means the authority appointed by the Government under
section 3;
(d)  “employee”  means  any  person  employed  in  any  factory,  plantation,
establishment or undertaking to do any skilled or unskilled, manual or clerical or supervisory
work for hire or reward but does not include any such person—
(i) whose monthly wages exceed rupees seven hundred and fifty; or
(ii) who is subject to the Army Act, 1950, or the Air Force Act, 1950, or the Navy
Act, 1957 or the Toddy Workers' Welfare Fund Act, 1969 (Kerala Act 22 of 1969); or
(iii) who is employed in the police service or as an officer or other employee of a
prison;
(e) “employer” means—
(i) in relation to any factory, plantation, establishment or undertaking which is
under the control of the Government, a person or authority appointed by the Government for
the supervision and control of employees or where no person or authority is so appointed, the
head of the Department;
(ii) in relation to any factory, plantation, establishment or undertaking under any
local authority, the person appointed by such authority for the supervision and control of
employees or where  no  person is 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 factory, plantation, establishment or undertaking and where the
said affairs are entrusted to any other person whether called a manager, managing director,
managing agent, superintendent, or by any other name, such person;
(f) “family” means—
(i)  in  the  case  of  a  male  employee,  the  wife,  children,  whether  married  or
unmarried, dependent parents of the employee and the widow and children of a deceased son
of the employee;
(ii) in the case of a female employee, the husband and children of the employee,
dependent parents of the employee or of the husband and the widow and children of a
deceased son of the employee:
Provided that if a female employee by notice in writing to the controlling authority
expresses her desire to exclude her husband from the family, the husband and his dependent
parents shall no longer be deemed to be part of the employee's family for the purposes of this
Act unless the employee subsequently cancels in writing any such notice;
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Explanation.—In either of the above two cases, if the child of an employee has been
adopted by another person and if under the personal law of the adopter, adoption is legally
recognised, such child shall be considered as excluded from the family of the employee;
(g) "prescribed" means prescribed by the Government by rules made under this Act;
(h) "retirement" means termination of the services of an employee for any cause, but
does not include superannuation;
(i) "superannuation" means the termination of the services of an employee by the
employer when the employee reaches the age of 60 years or such other age, if any, fixed in
the contract of service;
(j) "wages" means all remuneration capable of being expressed in terms of money,
which would, if the terms of employment expressed or implied, were fulfilled, be payable to
an  employee  in  respect  of  his  employment,  or  of  work  done  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;
(iii) any travelling concession;
but does not include bonus, commission, overtime wages and night allowance.
3.  Controlling  Authority.—The  Government  may  appoint,  by  notification  in  the
Gazette,  any  person  to  be  the  controlling  authority  who  shall  be  responsible  for  the
administration of this Act.
4. Payment of gratuity.—(1) Gratuity shall be payable to an employee—
(a) on his superannuation;
(b)  on  his  retirement,  resignation,  retrenchment,  discharge  or  dismissal  from
service after completion of a minimum period of five years of continuous service;
(c) on his death or total disablement due to accident or disease.
Explanation.—For  the  purpose  of  this  section,  total  disablement  means  such
disablement, whether of temporary or permanent nature, as incapacitates an employee for all
work  which  he  was  capable  of  performing  at  the  time  of  accident  resulting  in  such
disablement.
(2) In case of death of an employee, the gratuity shall be payable to the nominee of
the employee or in the absence of a nominee to the family of the employee.
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(3) In the cases referred to in clauses (a), (b) and (c) of sub-section (1), the employer
shall pay gratuity to each of his employees at the rate of fifteen days' wages based on the last
drawn wages for every completed year of service or part thereof in excess of six months:
Provided that the maximum amount of gratuity payable to an employee shall not
exceed fifteen months' wages:
Provided further that nothing in this section shall affect the right of any better terms of
gratuity or retirement benefits under any award or agreement or contract with the employer:
Provided also that in the case of voluntary retirement or resignation from service in
any particular year, not more than five per cent of the total number of employees in the
factory, plantation, establishment or undertaking shall be entitled to payment of gratuity and
if the number of employees who voluntarily retire or resign from service exceeds five per
cent of the total number of employees, the eligibility of an employee for payment of gratuity
shall be determined on the basis of the length of the service of the employee in the factory,
plantation, establishment or undertaking:
Provided further that an employee who voluntarily retires or resigns from service shall
be eligible to claim gratuity only if one month's notice in writing of his intention so to retire
or resign had been given to the employer.
5. Power to exempt.—The Government may, by notification in the Gazette, and subject
to such conditions as may be specified in the notification, exempt any factory, plantation,
establishment or undertaking to which this Act applies from the operation of the provisions of
this Act, if in the opinion of the Government, the employees or class of employees in any
such factory, plantation, establishment or undertaking are in receipt of benefits superior to the
benefits conferred under this Act.
6. Nomination.—(1) Each employee who has completed one year of service shall make
a nomination in the prescribed form to the employer conferring the right to receive the
amount payable to him under this Act in the event of his death before the amount becomes
payable, or where the amount has become payable but payment has not been made.
(2) An employee may in his nomination distribute the amount of gratuity payable to
him under this Act amongst his nominees at his own discretion.
(3) If an employee has a family at the time of making a nomination, the nomination
shall be in favour of one or more persons belonging to his family. Any nomination made by
such employee in favour of a person not belonging to his family shall be invalid.
(4)  If  at  the  time  of  making  a  nomination  the  employee  has  no  family,  the
nomination may be in favour of any person or persons but if the employee subsequently
acquires a family, such nomination shall forthwith be deemed to be invalid and the employee
shall make a fresh nomination in favour of one or more persons belonging to his family.
(5) A nomination made under sub-section (1) may, at any time, be modified by an
employee after giving a written notice of his intention of doing so in the prescribed form to
the employer. If the nominee predeceases the employee, the interest of the nominee shall
revert to the employee who shall make a fresh nomination in respect of such interest.
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(6) A nomination or its modification shall take effect to the extent it is valid on the
date on which it is received by the employer.
7.  Application for gratuity and procedure for payment .—(1) Any employee who is
eligible  for  payment  of  gratuity  under  this  Act  shall  send  a  written  application  to  the
employer within such time and in such form as may be prescribed.
(2) As soon as the amount of gratuity becomes payable the employer shall give
notice in writing to the employee and the controlling authority specifying the amount and the
employer shall arrange to pay the amount to the employee within such time as may be
prescribed.
(3) In case an employee who is eligible to get gratuity under this Act dies before
receiving the amount of gratuity due to him, the gratuity amount shall be paid to his nominee
or in the absence of a nominee to his family.
8. Recovery of gratuity amount.—(1) If the amount of gratuity due to an employee from
an employer under this Act is not paid by the employer within the time prescribed, the
controlling authority may, after due enquiry, by order determine the amount and shall issue a
certificate for that amount to the Collector who shall recover the same as arrears of land
revenue under the provisions of the Revenue Recovery Act for the time being in force.
(2) For the purposes of conducting an enquiry under sub-section (1) the controlling
authority shall have the same powers as are vested in a court for trying a suit under the Code
of Civil Procedure, 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 affidavit;
(d) issuing commissions for the examination of witnesses.
(3) Any enquiry 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.
(4) No order determining the amount of gratuity under sub-section (1) shall be made
unless the employer has been given a reasonable opportunity of being heard.
(5) Any person aggrieved by an order under sub-section (1) may, prefer an appeal to
the Government or any other authority as may be specified by the Government, within sixty
days from the date of the receipt of the order and the decision of the Government or of such
authority on such appeal shall be final.
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 one thousand rupees, or with both.
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(2) Whoever contravenes, or makes default in complying with, any of the provisions
of this Act or any rules made thereunder shall be punishable with imprisonment for a term
which may extend to three months or with fine which may extend to one thousand rupees or
with both.
10. Protection for acts done in good faith .—No suit, or other legal proceeding shall lie
against the controlling authority or any other authority in respect of anything which is in
good faith done or intended to be done under this Act or any rules made thereunder.
11. Delegation of powers.—The Government may, by notification in the Gazette, direct
that any power exercisable by them under this Act or the rules made thereunder shall be
exercisable also by such other authority as they deem fit.
12.  Power to make rules .—(1) The Government may, by notification in the Gazette,
make rules for the purposes of carrying into effect the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power such
rules may provide for—
(a) the duties, functions and powers of the controlling authority;
(b) the forms to be prescribed under this Act;
(c) any other matter which is to be prescribed.
(3) Every rule made under this Act shall be laid, as soon as may be after it is made,
before the Legislative Assembly while it is in session for a total period of fourteen days
which may be comprised in one session or in two successive sessions, and if, before the
expiry  of  the  session  in  which  it  is  so  laid  or  the  session  immediately  following,  the
Legislative Assembly makes any modification in the rule, or decides that the rule shall 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.
13.  Repeal and Saving .—(1) The Kerala Industrial Employees' Payment of Gratuity
Ordinance, 1969 (7 of 1969), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the said
Ordinance shall be deemed to have been done or taken under this Act as if this Act had come
into force on the 10th day of December, 1969.
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