Payment of gratuity act Flashcards
The Payment of Gratuity Act, 1972 applies to establishments with at least: a) 5 employees b) 10 employees c) 15 employees d) 20 employees
b) 10 employees
Gratuity is payable to an employee who has completed a minimum of: a) 3 years of continuous service b) 5 years of continuous service c) 7 years of continuous service d) 10 years of continuous service
b) 5 years of continuous service
Gratuity is calculated based on: a) Basic salary only b) Basic salary + Dearness Allowance c) Gross salary d) Employer’s discretion
b) Basic salary + Dearness Allowance
The maximum amount of gratuity payable under the Act is: a) ₹10 lakh b) ₹20 lakh c) ₹30 lakh d) No limit
b) ₹20 lakh
Gratuity is paid upon: a) Retirement b) Resignation after 5 years c) Death or disablement (even before 5 years) d) All of the above
d) All of the above
The formula for calculating gratuity for employees under the Act is: a) (Last drawn salary × number of years of service) ÷ 26 b) (Last drawn salary × number of years of service) ÷ 30 c) (Last drawn salary × number of years of service × 15) ÷ 26 d) (Last drawn salary × number of years of service × 30) ÷ 26
c) (Last drawn salary × number of years of service × 15) ÷ 26
The employer must pay gratuity within how many days of it becoming due? a) 15 days b) 30 days c) 45 days d) 60 days
b) 30 days
If the employer fails to pay gratuity within the stipulated time, they must pay: a) Simple interest b) Compound interest c) No interest d) Penalty only
a) Simple interest
Under Section 4(6), an employee may be denied gratuity if: a) He/she resigns voluntarily b) He/she commits an offense involving moral turpitude c) He/she is dismissed for poor performance d) He/she takes early retirement
b) He/she commits an offense involving moral turpitude
Which of the following establishments are covered under the Act? a) Factories b) Shops and establishments with 10 or more employees c) Mines, oil fields, plantations d) All of the above
d) All of the above
Gratuity is a: a) Voluntary payment by the employer b) Statutory right of the employee c) Benefit only for government employees d) Loan given to employees
b) Statutory right of the employee
The Act is enforced by: a) Labour Inspectors b) Central Government c) Controlling Authority appointed by State Government d) Trade Unions
c) Controlling Authority appointed by State Government
Which section of the Act deals with the calculation of gratuity? a) Section 2 b) Section 4 c) Section 6 d) Section 9
b) Section 4
Can an employee nominate someone to receive gratuity in case of death? a) Yes, as per Section 6 b) No, it must go to legal heirs c) Only for government employees d) Only if the nominee is a family member
a) Yes, as per Section 6
If an employer disputes the gratuity payment, the employee can approach: a) High Court b) Controlling Authority under the Act c) Trade Union d) Labour Commissioner
b) Controlling Authority under the Act
The time limit for filing a gratuity claim is: a) 30 days b) 60 days c) 90 days d) No specific time limit
c) 90 days
Gratuity can be forfeited if the employee: a) Is dismissed for willful negligence b) Has completed less than 5 years of service c) Takes unpaid leave d) Resigns voluntarily
a) Is dismissed for willful negligence
If gratuity is not paid within the prescribed time, the employer is liable to pay: a) Double the amount as penalty b) Interest at the government-prescribed rate c) 10% penalty d) Nothing, if the employer has financial issues
b) Interest at the government-prescribed rate
The Act applies to government employees: a) Yes, but they are covered under separate rules b) No, government employees do not get gratuity c) Yes, without any separate rules d) Only if they work in PSUs
a) Yes, but they are covered under separate rules
Under Section 7, an employer must pay gratuity: a) In cash b) By cheque or electronic transfer c) Either (a) or (b) d) Only through the bank
c) Either (a) or (b)
Can an employer refuse to pay gratuity due to company losses? a) Yes, if the company is in financial distress b) No, gratuity is a statutory obligation c) Only with government approval d) Yes, if the company is closing down
b) No, gratuity is a statutory obligation
Gratuity is taxed if it exceeds: a) ₹10 lakh b) ₹20 lakh c) ₹30 lakh d) ₹50 lakh
b) ₹20 lakh
If an employee works part-time, is he/she entitled to gratuity? a) No, only full-time employees are eligible b) Yes, if he/she has completed 5 years of service c) Only if specified in the contract d) Yes, with employer’s permission
a) No, only full-time employees are eligible
The Act applies to private sector employees: a) Yes, if the company has 10 or more employees b) No, gratuity is only for government employees c) Only in large corporations d) Only if specified in the contract
a) Yes, if the company has 10 or more employees
Who has the final authority in gratuity disputes? a) Labour Commissioner b) Controlling Authority c) District Magistrate d) Supreme Court
b) Controlling Authority
Which of the following is NOT a condition for an employee to be eligible for gratuity? a) Completion of 5 years of continuous service b) Retirement or resignation c) Voluntary leave without employer approval d) Death or disablement (even before 5 years)
c) Voluntary leave without employer approval
Under which section is the “Controlling Authority” defined? a) Section 2 b) Section 3 c) Section 4 d) Section 5
b) Section 3
The term “continuous service” under the Act is defined in which section? a) Section 2A b) Section 4 c) Section 5 d) Section 6
a) Section 2A
If an employee is temporarily absent from work due to illness or accident, does it break continuous service? a) Yes b) No c) Only if the employer agrees d) Only for permanent employees
b) No
Which of the following authorities has the power to resolve disputes under the Payment of Gratuity Act? a) Labour Court b) Controlling Authority c) High Court d) Ministry of Labour
b) Controlling Authority
Gratuity is considered a part of: a) Employer’s voluntary contribution b) Social security benefit c) Employee’s provident fund d) Employee’s taxable income
b) Social security benefit
The Payment of Gratuity Act came into force in: a) 1965 b) 1972 c) 1985 d) 1991
b) 1972
If an employee dies while in service, gratuity is paid to: a) The nominee or legal heir b) The employer c) The government d) No one, as the service is incomplete
a) The nominee or legal heir
Under Section 4(3), what is the current maximum gratuity limit? a) ₹10 lakh b) ₹20 lakh c) ₹30 lakh d) ₹50 lakh
b) ₹20 lakh
Who is responsible for determining the gratuity amount in case of disputes? a) Employer b) Controlling Authority c) Labour Union d) Trade Union Leader
b) Controlling Authority
Under which section is the provision for nomination mentioned? a) Section 4 b) Section 6 c) Section 8 d) Section 9
b) Section 6
Can an employee change their gratuity nominee? a) No, once nominated, it cannot be changed b) Yes, anytime by filing a new nomination c) Only if the nominee dies d) Only with employer approval
b) Yes, anytime by filing a new nomination
Under Section 7, gratuity must be paid within: a) 7 days b) 15 days c) 30 days d) 60 days
c) 30 days
What happens if an employer delays gratuity payment beyond 30 days? a) The employer has to pay simple interest b) No penalty applies c) The employee has to request in writing d) The gratuity amount is forfeited
a) The employer has to pay simple interest
Gratuity is applicable to which of the following establishments? a) Factories b) Mines c) Oil fields d) All of the above
d) All of the above
If a company suddenly shuts down, are employees still entitled to gratuity? a) Yes, as per the Act b) No, since the company no longer exists c) Only if the closure is due to bankruptcy d) Only if employees file a case
a) Yes, as per the Act
Under which section is the employer’s obligation to pay gratuity defined? a) Section 3 b) Section 4 c) Section 6 d) Section 8
b) Section 4
Which of the following is NOT considered part of the “wages” for gratuity calculation? a) Basic salary b) Dearness Allowance c) Bonus d) Commission (if part of the salary structure)
c) Bonus
Under Section 4(5), can an employer provide gratuity benefits better than what is prescribed under the Act? a) Yes, they can provide higher benefits b) No, the Act provides a fixed limit c) Only for government employees d) Only with court approval
a) Yes, they can provide higher benefits
Can an employee voluntarily opt out of receiving gratuity? a) Yes, with employer approval b) No, gratuity is a statutory right c) Only if mentioned in the contract d) Only with government approval
b) No, gratuity is a statutory right
What is the penalty for non-compliance with the Payment of Gratuity Act? a) Fine of ₹10,000 and/or imprisonment up to 6 months b) No penalty c) Fine of ₹50,000 d) Warning from labour commissioner
a) Fine of ₹10,000 and/or imprisonment up to 6 months
If an employee is re-employed after retirement, does their previous service count towards gratuity? a) No, each service period is counted separately b) Yes, if the employer agrees c) Only if the gap between jobs is less than a year d) Yes, if the employee works in the same company
a) No, each service period is counted separately
Can gratuity be attached by court orders for debts? a) No, gratuity cannot be attached b) Yes, if the employee has large debts c) Only for government employees d) Yes, with employer approval
a) No, gratuity cannot be attached
If an employee has worked for 4 years and 240+ days in the 5th year, are they eligible for gratuity? a) Yes b) No c) Only if the employer agrees d) Only in private sector
a) Yes
Which authority has the power to prosecute an employer for failing to pay gratuity? a) Controlling Authority b) Labour Court c) Industrial Tribunal d) Civil Court
a) Controlling Authority
