The Karnataka Government recently introduced the Karnataka Compulsory Gratuity Insurance Rules, 2024. It is effective from 10th January 2024. These rules mandate that all Indian and multinational companies, operating within Karnataka must comply with the regulations before 9th March 2024. Organizations such as schools, colleges, hospitals, hotels, and NGOs need to adhere to this. Understanding these rules is crucial for businesses. And organizations need to ensure compliance and avoid penalties.

The Karnataka Compulsory Gratuity Insurance Rules, 2024, apply to all establishments covered under the Payment of Gratuity Act, 1972, with ten or more employees. This includes Indian and multinational companies, as well as other organizations mentioned earlier. It is mandatory for such establishments to provide gratuity insurance for their employees.

The rules require compliance by all affected establishments before 9th March 2024. This means that employers must ensure that they have implemented the necessary measures to provide gratuity insurance for their employees before the deadline.

Under these rules, employers are required to take out a group gratuity insurance policy from an insurance company approved by the Insurance Regulatory and Development Authority (IRDA). This policy provides coverage for gratuity payments to employees in case of their termination, retirement, or death.

Employers are responsible for paying the premium for the group gratuity insurance policy. The premium amount is determined based on factors such as the age and salary of the employees, as well as the size of the gratuity fund.

The gratuity amount payable to an employee is calculated based on the employee's last drawn salary and the number of years of continuous service. The formula for calculating gratuity valuation is specified in the Payment of Gratuity Act, 1972.

In the event of an employee becoming eligible for gratuity payment, the employer must initiate the claim process with the insurance company. The insurance company will then process the claim and make the payment to the employee or their nominee.



Conclusion

Understanding the Karnataka Compulsory Gratuity Insurance Rules is essential for both employers and employees to ensure compliance and understanding of their rights and obligations regarding gratuity payments. Employers must ensure that they provide gratuity insurance for their employees as mandated by law. For employees, it is important to be aware of these rules to ensure that they receive the gratuity payments they are entitled to.