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CMA Intermediate · Business Laws and Ethics · Payment of Gratuity Act, 1972

Meena, an employee of a private company in Pune, dies in an accident after 2 years of service. Under Section 53 of the Code on Social Security, 2020, which statement is correct?

Gratuity is payable to her nominee, or to her heirs if no nomination exists. Under the second proviso to Section 53(1), completing five years of continuous service is not necessary when employment ends by death, so her two years of service do not bar payment.

  1. AGratuity is payable to her nominee or, if none, her heirs, since five years of service is not necessary on deathCorrect
  2. BNo gratuity is payable because she did not complete five years
  3. CGratuity is payable only if she had completed at least three years
  4. DGratuity is payable only to her employer's provident fund trust

Explanation

The second proviso to Section 53(1) dispenses with five years of continuous service where employment ends by death, disablement or fixed term expiry. The third proviso directs payment to the nominee or, failing that, the heirs. Hence the other options are wrong.

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