Gratuity is a payment from an employer to an employee as a token of appreciation for their service. It is a right earned by the employee.

Who is eligible for gratuity?

Employees who have worked for a company for at least five years are eligible for gratuity, provided they meet other conditions set by the employer.

When must an employer get a valid insurance policy under these rules?

Existing employers must obtain an insurance policy within 6 months from July 4, 2024. New employers must get it within 30 days of starting their establishment.

Gratuity is a payment from an employer to an employee as a token of appreciation for their service. It is a right earned by the employee.

Who is eligible for gratuity?

Employees who have worked for a company for at least five years are eligible for gratuity, provided they meet other conditions set by the employer.

When must an employer get a valid insurance policy under these rules?

Existing employers must obtain an insurance policy within 6 months from July 4, 2024. New employers must get it within 30 days of starting their establishment.

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Karnataka Compulsory Gratuity Insurance Rules: What Are The Insurance Requirements?

Q: What are the Karnataka Compulsory Gratuity Insurance Rules, 2024?

These rules require employers to obtain an insurance policy to cover gratuity payments to employees. This ensures employees receive gratuity even if the company faces financial issues.

Q: What is a valid insurance policy under these rules?

A valid insurance policy can be obtained from Life Insurance Corporation of India or other approved insurance companies. It must comply with relevant laws.

Q: What are the Karnataka Compulsory Gratuity Insurance Rules, 2024?

These rules require employers to obtain an insurance policy to cover gratuity payments to employees. This ensures employees receive gratuity even if the company faces financial issues.

Q: What is a valid insurance policy under these rules?

A valid insurance policy can be obtained from Life Insurance Corporation of India or other approved insurance companies. It must comply with relevant laws.

Tanisha

Author

Updated: 28-01-2025 at 6:42 AM

Karnataka Compulsory Gratuity Insurance Rules: What Are The Insurance Requirements?

Gratuity acts as a token of appreciation from the employer to his employees for their service. It is also an earned benefit of the employee and the employee has full right to receive it. The government has introduced multiple measures and provisions to ensure the timely provision of gratuity for eligible receivers.

Some organisations have designated funds known as gratuity funds for rewarding their employees. However, gratuity may not always be paid by the employer, causing an imbalance of interests. To avoid such conflicts and to provide gratuity in events of financial losses to the company, the Government of Karnataka introduced the Karnataka Compulsory Gratuity Insurance Rules, 2024.

What Are The Karnataka Compulsory Gratitude Insurance Rules?

The rules were notified on January 10, 2024. Rule 3(2) of the Karnataka Compulsory Gratuity Insurance Rules, 2024 says that an employer of an establishment in existence at the time of notification of these rules shall obtain a valid insurance policy within 60 days from the commencement of such rules. This provision of 60 days has now been extended to a period of 6 months via an order dated July 4, 2024.

Every new employer of a new establishment must obtain a valid insurance policy within 30 days and 30 days of the rules becoming applicable to such an establishment.

The employers will be contributing to such insurance policy periodically and depositing the premium. These policies can be redeemed to pay gratuity to the employees without worrying about the finances of the establishment.

What Is A Valid Insurance Policy Under These Rules?

An insurance policy according to the Rules can be obtained from Life Insurance Corporation of India or any other Insurance Company deemed fit by the Insurance Regulatory and Development Authority of India, Insurance Act 1938, Companies Act, 2013 or any other law applicable.

If the employer has a gratuity fund in place already, they need not buy an insurance policy for gratuity. They may imitate the authorities by applying. However, the employer must ensure that the gratuity fund covers the gratuity liability of all employees of the establishment.

Similar policies have been adopted by other states such as Kerala, Andhra Pradesh and Telangana to make buying insurance policies for employee’s gratuity compulsory in furtherance of social welfare schemes.

How To Register An Establishment Under The Rules?

The Process to register your establishment under the rules is simple. Let us have a glance at it:

Apply Form I with the Controlling Authority of the area.
The employer must provide the details of the employees insured, to the Controlling Authority in Form-III.
Change in the number of employees insured or policies or other information is required to be filed along with Form III with the Controlling Authority.

Conclusion

Gratuity is a positive incentive aimed at appreciating the efforts of a person in the company and thanking them for it. Knowing about the prevalent Gratuity Rules 2024 is very important for every organisation and employee. Every employee must be aware of his rights and duties such as paying taxes. Check if you got your Form 16 and other requirements before filing your tax, read the details in our article “Did you get your Form 16? Check This Before Filing The ITR”.

For more information, access the rules here. For grievances and queries, contact the Labour Inspector of your locality from the contact details here.

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