Gratuity Act

Dear Readers,

Wish You a Happy May Day-2024

Gratuity is one of the many retirement benefits offered by a company to an employee. It is a lump sum amount that employers pay their employees as a sign of gratitude for the services provided. However, only those employees who have been employed by the company for five years or more are given the gratuity amount. It is governed by the Payment of Gratuity Act, 1972.

All central and state government departments, defense, and local governing bodies are covered under this act. Private organizations can come under its purview subject to fulfilment of certain conditions.

Gratuity Act shall be applicable to

(a)    Every factory, mine, oilfield, plantation, port and railway company.

(b)    Every shop or establishment to which Shops & Establishment Act of a State applies in which 10 or more persons are employed at any time during the year end.

(c)     Any establishment employing 10 or more persons as may be notified by the Central Government.

(d)    Once Act applies, it continues to apply even if employment strength falls below 10.

To receive the gratuity, you must meet the following eligibility criteria:

You should be eligible for superannuation.

You should have retired from service.

You should have resigned after continuous employment of five years with the company.

You on disablement on account of a sickness or an accident.

In case of your death the gratuity is paid to the nominee.

However, the condition of completion of continuous service of five years shall not be necessary in case the termination of the employment of any employee is related to their death or disablement. In this case, ‘completed year of service’ would refer to as continuous service for one year and an employee shall be said to be in continuous service for a period if he/she has been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave, lay off, strike or a lock-out or cessation of work not due to any fault of the employee.  There is a judgment by the Madras High Court, which states that an employee would be eligible for gratuity even in case he/she has completed 4 years 240 days.

In addition to above, in the case of death or incapacitated, the employer is mandated by law to pay gratuity to the now ex-employer or his nominee/legal heir, as the case may be, irrespective of the number of years of continuous service.

The law further states that in case the nominee of the employee is a minor, then the assistant labour commissioner shall invest the money in nominee’s name in a term deposit with the State Bank of India or a nationalized bank for the minor’s benefit until he/she becomes a major.

Formula for gratuity calculation is G=S*N*15/26

  Gratuity (G)= Last Drawn Salary(S) × No. of Years of Service(N)× 15/26

  The ratio 15/26 represents 15 days out of 26 working days in a month.

  S = Last drawn salary = (Basic Salary + Dearness Allowance).

  N = Years of Service are rounded down to the nearest full year. 

If the number of years you have worked in the last year of employment is more than six months, then it will be rounded to the nearest figure. Suppose your tenure of service is 16 years 7 months, then you receive the gratuity for 17 years. Otherwise, it’s for 16 years if it happens to be 16 years 4 months.

The tax treatment of the gratuity amount depends on the type of employee who has to receive the gratuity.

The amount of gratuity received by any government employee (whether central/state/local authority) is exempt from the income tax.

Any other eligible private employee whose employer is covered under the Payment of Gratuity Act. The maximum amount of gratuity specified is Rs 20 lakh, irrespective of the number of years of service. Please note that in your entire working life, the maximum tax-exempt gratuity amount you may claim, cannot go beyond Rs 20 lakh. Any excesses would be treated as ex-gratia and liable for tax as per the tax bracket.

Gratuity paid to the widow or legal heir of an employee will be exempt of tax – Upon an employee’s demise, the gratuity that is paid to his widow or legal heir will be exempt from tax. Any ex-gratia payment made to an employee or his legal heir on account of an injury caused will also be tax-free.

Forfeiture of gratuity- According to the Payment of Gratuity Act of 1972, when the employee has been terminated due to disorderly conduct wherein, he/she tries to physically harm individuals during his/her employment, an employer holds the right to forfeit their gratuity payment, either wholly or partially despite the employee having completed 5 and more years of service in a company.

Why there is a hole in Washbasin?

Dear Readers,

When you go to wash your hands or rinse a glass out, you may have noticed a hole on the upper part of the sink.

 

This is in addition to the drain at the very bottom to easily empty the basin. If there’s already a perfectly functioning drain, why is there an extra hole in the sink? And why would it be higher up? We will discuss the purpose of the hole in the washbasin in this article.

These seemingly mysterious holes actually serve two purposes. One is to prevent overflow of water and Another reason for hole in the wash basin is that it provides an escape route for the air in the drain (Like a Vent).

Overflow Prevention: Imagine filling the basin with water for various reasons—soaking your hands, cleaning an item, or even just wiping down a room. Sometimes, distractions occur, and we forget to turn off the tap. The result? A potential flood! To prevent this, washbasins are designed with an extra hole. If the water level rises too high, it can escape through this hole, saving you from a watery disaster.

Faster Drainage: That extra hole isn’t just for show. It helps water flow more efficiently down the drain. Without it, air trapped in the drain creates resistance, slowing down the drainage process. The hole provides an escape route for the air, allowing the sink to drain faster.

Abbreviations Used in Construction Industry - Part 1 (A to C)

Dear Readers,

Whether you’re a seasoned professional or just starting, understanding construction management acronyms, construction estimating abbreviations, and construction project management acronyms is key to success in the industry. With so many acronyms in circulation, finding the right one can be challenging, but with a construction acronym finder, you can quickly and easily find the acronym you need.

This article will be a valuable resource for anyone looking to enhance their knowledge of the construction industry. Here is the list of approximately 330 acronyms used in the construction industry and EPC projects. It will be posted part by part.

1) 3D Printing – The Use of Advanced Technology to Create Physical Objects from Digital Models.

2) ABW – Average Basic Wages. It is used to calculate the basic wages of work force deployed.

3) A/C - Air Conditioner.

4) AC/DC – Alternating Current / Direct Current.

5) AG / UG – Above Ground / Under Ground.

6) AGL – Above Ground Level.

7) AHU – Air Handling Unit.

8) ALM – Alarm.

9) ALUM – Aluminium.

10) AMC – Annual Maintenance Contract.

11) APX – Approx.

12) AR (Augmented Reality) – The Use of Technology to Overlay Digital Information onto the Physical World.

13) Arbitration – A Form of Alternative Dispute Resolution Where a Neutral Third Party Makes a Binding Decision.

14) ASME – American Society of Mechanical Engineers.

15) ASPH – Asphalt.

16) AWS – American Welding Society.

17) Backfill – The Process of Filling in a Trench or Excavation with Soil or Other Materials.

18) BG – Bank Guarantee.

19) BGL – Below Ground Level.

20) BH – Bore Hole.

21) BIM (Building Information Modelling) – A Digital Representation of The Physical and Functional Characteristics of a Building or Construction Project.

22) Bldg. – Building. Generally, denotes civil buildings.

23) BLR – Boiler.

24) BMS (Building Management System) – An automated system for controlling and monitoring building systems.

25) BOM (Bill of Materials) – A List of All the Materials Required for a Construction Project.

26) BOP – Balance of Plant.

27) BOQ (Bill of Quantities) – A list of materials, quantities, and prices for a Construction Project.

28) BOS – Bottom of Steel / Slab.

29) BOT – Built Operate Transfer.

30) BTG – Boiler, Turbo Generator. 

31) Budget – A Financial Plan for a Construction Project, Including Estimated Costs and Revenue.

32) BWF – Barbed Wire Fence.

33) BWL – Brick Work.

34) BYND – Beyond.

35) CAD (Computer-Aided Design) – The Use of Computer Software to Create 2D And 3D Design Drawings.

36) Canopy – It is denoting Roof or shelter of the equipment or building or any object.

37) CAPEX – Capital Expenditure.

38) Cat. – Category. 

39) C to C or C/C – Centre to Centre. In dimensional callouts, centre-to-centre indicates the spacing between the centre of an item or component and adjacent items or components, such as reinforcing steel, columns, footings, rails, etc.

40) CGL – Centre of Gravity Line. It is used to calculate for rigging (erect the object) purpose.

41) CI – Cast Iron.

42) CoCP – Code of Construction Practice.

43) Construction Contracting: Understanding Types of the Construction Contract.

44) Change Order (CO)– A Document That Outlines Changes to The Original Scope of Work for a Construction Project.

45) CL – Centre Line used in construction drawing.

46) Cladding – The Exterior Material Used to Cover the Walls of a Building.

47) Claim Management – The Process of Managing and Resolving Claims in a Construction Project.

48) CM (Construction Manager) – A Professional Responsible for Overseeing the Construction Process and Ensuring It Meets Budget, Timeline, and Quality Requirements.

49) CO (Certificate of Occupancy) – A Document That Certifies a Building Is Safe to Occupy.

50) COC – Certificate of Completion / Compliance.

51) Code Compliance – Ensuring a Construction Project Meets All Relevant Building Codes and Regulations.

52) COL – Column.

53) Commissioning – The Process of Testing and Verifying the Functionality of Systems and Equipment in A Completed Construction Project.

54) Completion Certificate (CC) – It is a certificate issued by the builder to the Authority.

55) CONC – Concrete.

56) Conflict Resolution – The Process of Resolving Disputes and Conflicts that arise in a Construction Project.

57) Constructability Review – An Evaluation of the Feasibility and Ease of Construction for a Project.

58) Construction Management – The Process of Managing and Coordinating the Construction Process from Start to Finish.

59) Construction Waste Management – The Management and Control of Waste Generated During a Construction Project.

60) Contingency Plan – How to Handle Unexpected Events or Situations in a Construction Project.

61) Contracts – A Legal Agreement Between Two Or More Parties That Outlines the Terms and Conditions of a Construction Project.

62) Cost Control – The Process of Managing and Controlling the Costs of a Construction Project.

63) Cost Estimating – The Process of Determining the Cost of a Construction Project.

64) Cost-Benefit Analysis – An Analysis of The Costs and Benefits of a Construction Project. 

65) Cost Statement (CS) - It is a statement that shows the cost incurred till that period.

66) CPB – Chain Pulley Block. It is a lifting arrangement/ Tool.

67) CPI – Cost Performance Index – In earned value analysis, the CPI is a comparison of the actual work completed to the actual cost incurred.

68) CPM (Critical Path Method) – A project management technique for scheduling and controlling construction projects.

69) Critical Path – The Sequence of Activities in A Construction Project That Determines the Overall Project Completion Date.

70) CRM - Customer Relationship Management.

71) CRS – Cold Rolled Steel.

72) CSR – Corporate Social Responsibility.

73) CVL – Civil.

74) CW – Cold Water.

75) CWI – Catchment Wetness Index.

Part-2 will be followed later.