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

Vikram, an employee of a Chennai firm, became disabled by an accident after four years of service and was then employed on reduced wages. Which statement about computing his gratuity is correct under the Code on Social Security, 2020?

For an employee employed on reduced wages after disablement, wages for the period before disablement are taken as those actually received then, and wages for the period afterwards are the reduced wages. Five years of service is not needed in case of disablement.

  1. AHis wages for the period before disablement are taken as the wages received then, and for the period after disablement as the reduced wagesCorrect
  2. BThe reduced wages are taken for the whole period of service
  3. CHe gets no gratuity because he has not completed five years
  4. DThe pre-disablement wages are taken for the whole period of service

Explanation

Section 53(4) provides that for an employee employed after disablement on reduced wages, wages before disablement are the wages received then and wages after disablement are the reduced wages. The second proviso to section 53(1) removes the five-year requirement where termination is due to disablement, so the other options are wrong.

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