All about HR and IR

  Question - Our establishment is covered under the Payment of Gratuity Act. We have been advised by our payroll adviser that we have to get ourselves compulsorily an insurance policy for the payment of gratuity with the Life Insurance Corporation. Is he justified and desirable? Answer -  Neither he is justified nor it is desirable. It is pertinent to state here that the Central government, vide Amendment Act No.22 of 1987, has inserted section 4A under the Payment of Gratuity Act, under the caption of ‘compulsory insurance'. Such insertion of compulsory insurance has not been notified for all these years, but at the same time, it has created a misunderstanding amongst the employers who have obtained compulsory insurance. It leads to the blocking of working capital. As it is not at all compulsory, the employers or their advisors or executives should not be misled in the continuation of the implementation of section 4A of the Act. However, amongst other States, only Andhra Pradesh h