Workers in big, medium and small establishments across the State risk losing their gratuity amount with most employers not obtaining the mandatory ‘gratuity insurance’, and the Labour Department not enforcing the law.
All establishments with more than 10 workers are to obtain gratuity insurance, mandatory under the ‘A.P Compulsory Gratuity Insurance Rules-2011’, to ensure that the employees are assured of getting their gratuity in the eventuality of company’s closure due to a variety of reasons including insolvency.
For some inexplicable reasons, the Labour Department has not been enforcing these rules, even one year after they were framed.
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While there are nearly 35,000 such establishments in the State, their registration has not yet begun. Hence, in one year since formation of the rules most establishments have not secured insurances.
“Barring a few large industries, majority of the establishments do not have the insurance,” said labour officials. While it is the employers’ liability to register their establishments and secure insurances, the Assistant Commissioner of Labour has to enforce the rule.
Yet, no evading employer has been prosecuted so far even as non-insurance has been made a punishable offence with imprisonment up to one year besides a fine of up to Rs.20, 000. “We now plan to conduct regular inspections,” officials said.
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Lack of awareness about the law, both among workers and employers, is also a reason for the failure.
“Most workers are not even aware of a rule that guarantees them gratuity under any circumstance. With no effort to create awareness, few can demand its enforcement,” rued R. Sudha Bhaskar, CITU state general secretary.
The State had failed to frame the gratuity insurance rules until last year, even as the Central Government had made the insurance mandatory under the ‘Payment of Gratuity Act’ in 1987 itself. As a result, scores of workers in companies that had not obtained insurances and were forced to shutdown, have lost their gratuity.
Over 400 workers of the Yemmiganur Spinning Mills in Kurnool district losing their entire gratuity due to the company’s insolvency, is a case in point.
As per the State rules, an amount equal to 15 days of a workers wages in every completed work year has to be paid as gratuity. And an employee is eligible for gratuity only on completion of five years at the establishment.
But, in cases of death or disability, the amount is disbursed irrespective of the number of years put in.
A maximum of Rs.10 lakh can be paid as gratuity. The scope for classifying a person as an employee is ‘widest’ under the gratuity act.