Legal Services and Laws of Sri Lanka
Payment Of Gratuity
Act No 12 of 1983
AN ACT TO PROVIDE FOR THE PAYMENT or A GRATUITY BY EMPLOYERS TO THEIR WORKMEN, FOR THE AMENDMENTOFTHELANDACQUISITION
ACT, THE LAND REFORM LAW AND THE INDUSTRIAL DISPUTES ACT, AND FOR MATTERS CONNECTED THEREWITH OR INCIDENTAL THERETO.
BE it enacted by the Parliament of the Democratic Socialist Republic of Sri Lanka as follows:"
Short title and date of operation.
1.This Act may be cited as the Payment of Gratuity Act, No. 12 of 1983, and shall come into operationonsuchdateas
the Minister may appoint, by Order published in the Gazette.
Employer's liability to pay gratuity to workmen employed on lands that vested in the Land Reform Commission.
2.(1) Every employer who has employed a workman on any agricultural land or estate land that vested in the LandReform
Commission by the operation of the Land Reform Law or on any land acquired under the Land Acquisition Act onorafter
May 29, 1971, and deemed to have been vested in the Land Reform Commission in terms of subsection (1) of section 21of
the Land Reform (Special Provisions) Act, No. 39 of1981,foraperiodofnotlessthanfivecompletedyears
immediately prior to such vesting or such acquisition as the case may be, shall pay to that workman in respectofhis
services, or in the event of the death of that workman to hisheirs,agratuitycomputedinaccordancewiththe
provisions of this Part, within a period of thirty days of the coming into operation of this Act:
Provided however, that the preceding provisions shall notapplyin'respectoftheportionorportionsofthe
agricultural land such employer is allowed to retain in terms of subsection (1) of section 19 of the Land Reform Law.
(2) The provisions of subsection (1) shall be deemed to have come into force on August 26, 1972.
(3) The liability imposed on an employer by subsection (1) shall, in the event of the death oftheemployeronor
after August 26, 1972, and before that liability is discharged, be discharged by his legal representative.
(4) The provisions of this Part shall not apply to or in relation to a workman who is an Indianrepatriatetowhom
the provisions of the Emergency (Payment of Gratuities and other Monetary Benefits to IndianRepatriates)Regulations
made under section 5 of the Public Security Ordinance applied or the Payment of Gratuities. and other Monetary Benefits
to Indian Repatriates, (Special Provisions) Law, No. 34 of 1978, applies,
Rate of payment of a gratuity.
3.(1) A workman employed as a labourer"'
(a)shall be entitled to the payment of a gratuity under section 2, in a sum equivalent to fourteendays'wage
or salary for each year of completed service prior to the, commencement of his liability tocontributeto,the
Employees Provident Fund computed at the rate of wage or salary paid or that would have been paid to such workman
in the month of November, 1959and
(b)shall be entitled to the payment of a gratuity under section 2, in a sum equivalent to seven days'wageor
salary for each year of completed service subsequent to the commencement of his liability tocontributetothe
Employees' Provident Fund computed in the same manner as in paragraph (a), of this subsection.
(2) Where a workman is employed in any capacity other than as a labourer, he shall be entitled to thepaymentofa
gratuity under section 2, computed at the rate of a sum equivalent to one month's gross wage or salary of thatworkman
for each year of completed service"
(i)if that workman was employed on any agricultural land that vested in the Land ReformCommissiononAugust
26, 1972, based on the gross rate of wage or salary, that would have been paid for the month of August. 1972.if
he had worked, for the whole of that month,
(ii) if that workman was employed on any estate land that vested in the Land Reform CommissiononOctober
17, 1975, based on the rate of wage or salary that would have been paid for the month of October, 1975, if he had
worked for the whole of that month,
(iii)if that workman was employed on any land that was acquired under the Land AcquisitionAct,basedon
the rate of wage or salary that would have been paid for the month in which such land was acquired,
if he had worked for the whole of that month, less the employer's contribution to the Employees' Provident Fund,, or to
an approved provident fund or to any pension fund in respect of that workman for the perioduptoAugust26,1972,
where that workman is a workman referred to in paragraph (i) of thissubsection,orOctober17,1975,wherethat
workman is a workman referred to in paragraph (ii) of this subsection, or, up to the date ofsuch,acquisitionwhere
that workman is. a workman referred to in paragraph (iii) of this subsection.
(3) Where an employer has paid a gratuity in respect of the services of a workman in accordance with the orderofa
labour tribunal or an award or settlement under the Industrial Disputes Act. that employer, shall not be liable topay
in respect of .such services a gratuity under this Part.
Commissioner to issue certificate to the Land Reform Commission specifying the sum due as gratuity to a workman.
4.(1) Notwithstanding the provisions of any other law, where any land on which a workman towhomtheprovisionsof.
this Act apply was employed, has vested in the Land Reform Commission under the Land Reform Law or is deemed to have so
vested, the Commissioner shall, after' such inquiry as he may deem necessaryissue a certificatespecifyingthesum
due as gratuity to that workman from that employer in respect of his services under that employer prior to the dateof
such vesting or acquisition.
(2) Where the Commissioner issues a certificate under subsection (1) specifying the sum due as gratuity to aworkman
from his employer, the Land Reform Commission shall, subject to the provisions of subsection (1) ofsection"6.make
payment of such sum to the workman" "through the Commissioner.
(3) A copy of the certificate referred to in subsection (J) shall be, sent by the Commissionertotheemployerof
the" workman in respect of whom the certificate is issued.
(4) The sum paid by the Land Reform Commission to a workman under this section orthesumremittedinaccordance
with the provisions of subsection (1) of section 6, shall be a firstchargeonthecompensationpayabletothe.,
employer of that workman under section 32 or section 42J of the Land Reform Law and that sum shall be fromtheamount
of compensation awarded to employer.
Employers liability to pay gratuity to his workmen for termination after the coming into operation of this Act.
5.(1) Every employer who employs or has employed fifteen or more workmen on any day during the period of twelvemonths
immediately preceding the termination of the services of a workman in any industry shall, ontermination(whetherby
the employer or workman, or on retirement or by the death of the workman, or by operation of law, or otherwise) ofthe
services at any time after the coming into operation of this Act, of a workman who has a period of service of notless
than five completed years under that employer, pay tothatworkmaninrespectofsuchservices,andwherethe
termination is by the death of that workman, to his heirs, a gratuity computed in accordancewiththeprovisionsof
this Part within a period of thirty days of such termination.
(2) The liability imposed on an employer under subsection (1) shall, in the eventofthedeathofthatemployer
before that liability is discharged, be discharged by his legal representative.
(3) Notwithstanding the provisions of the Payment of Gratuities and other MonetaryBenefitstoIndianRepatriates
(Special Provisions) Law, No. 34 of 1878, if an Indian repatriate as defined in such Law is aworkmanfallingwithin
the category mentioned in subsection (1) of this section, such repatriate shall not be entitled to receiveagratuity
under the provisions of the said Law, in respect of a period of service for which agratuityispayableunderthis
Rate of payment of gratuity.
6.(1) The provisions of this part shall apply to and in relation to a workman employed in any industryinrespectof
the entire period of service under an employer
Provided, however that, where a workman who is entitled to a gratuity under Part I of this Act continues inemployment
after the agricultural land or estate land on which he was employedvestedintheLandReformCommissionbythe
operation of the Land Reform Law, or the land on which he was employed was acquired under the Land Acquisition Actand
is entitled to a gratuity under this Act, the period of service of such workman shall include the period of servicein
respect of which he is entitled to a gratuity under Part I of this Act, and, the gratuity in respect oftheaggregate
period of service shall be paid by the employer who is liable in terms of subsection (1) of section 5:
Provided, further that, notwithstanding anything to the contrary in Part I of this Act, the amount of the, gratuityto
which such workman is entitled under that Part shall be remitted to the said employer who shallbeliabletopaya
gratuity in respect of the aggregate period of service of such workman.
(2)A workman referred to in subsection. (1) ofsection5shallbeentitledtoreceiveasgratuity,asum
(a)half a month's, wage or salary for each year of completed service computed at the rateofwageorsalary
last drawn by the workman, in the case of a monthly rated workmanand
(b)in the case of any other workman, fourteen days'wageorsalaryfor,eachyearofcompletedservice
computed at the rate of wage or salary last drawn by that workman:
Provided, however that, in the case of a piece rated workman the daily wage or salary shall be,computedbydividing
the total wage or salary received by him for a period of three months immediatelyprecedingtheterminationofhis
employment, by the number of days worked by him in that period.
(3) Notwithstanding the provisions contained in subsection (2), the gratuity payable to a workman referred to inthe
first provision to subsection (1) in respect of the period of service for which he is entitled to a gratuity under Part
I of this Act, shall be computed at the rate of a sum equivalent to fourteen days' wage or salary of thatworkmanfor
each year of completed service based on the rate of wage or salary payable in the month in which suchlandvestedin
the Land Reform Commission or was acquired under the Land Acquisition Act.
Limits on applicability of section 5.
7.The provisions of section 5 shall not apply to or in relation to a workman-
(a)employed as a domestic servant or as a domestic servant or as a personal chauffeur in aprivatehousehold
(b)entitled to a pension under any non-contributory pension scheme.
Recovery on gratuity on defaulter's failure to pay.
8.(1) Where any default is made in the payment of any sum due as gratuity under this Actorwherethegratuitydue
under this Act cannot be recovered under the provisions of section 4 or undertheprovisionsofsubsection(5)of
section 17 of the Land Acquisition Act, the Commissioner may issue a certificate after suchinquiryashemaydeem
necessary, stating the sum due as gratuity and the name and place of residence ofthedefaulter,totheMagistrate
having Jurisdiction in the division in which the estate or establishment is situate. The Magistrateshall,thereupon,
summon the defaulter before him to show cause why further proceedings for the recovery of the sum due as gratuity under
this Act should not be taken against him and in default of sufficient cause being shown, the sum indefaultshallbe
deemed to be a fine imposed by a sentence of the Magistrate on such defaulter for an offence punishable with fineonly
or not punishable with imprisonment and the provisions of subsection (1) of section 291 (except paragraph (a), (d)and
(i) thereof) of the Code of Criminal Procedure Act, No. 15 of 1979, relating to default of payment ofalineimposed
for such an offence shall thereupon apply and the Magistrate may make any decision whichbytheprovisionsofthat
subsection, he could have made at. the time of imposing such sentence.
(2) The Commissioner's certificate shall be prima facie evidencethattheamountdueunderthisActfromthe
defaulter has been duly calculated, and that the amount is in default.
(3) Every sum recovered by Court under this section shall be paid to the 'Commissioner who shall thereuponpaythat
sum to the person or persons entitled to it under this Act.
(4) Nothing in subsections (2) to (5) of section 291 of the Code of Criminal Procedure Act, No.15of1979,shall
apply to any case referred to in subsection (1) of this section.
(5) In any case referred to in subsection (1) in which the defaulter issentencedtoimprisonmentindefaultof
payment of the fine deemed by that section to have been imposed on him, the Magistrate may allow time forthepayment
of the amount of that fine or direct payment of that amount to be made in installments.
(6) The Court may require bail to be given as a conditionprecedenttoallowingtimeundersubsection(1)for
showing cause as therein provided or under subsection (5) for the payment of the fine, end theprovisionsofChapter
XXXIV of the Code of Criminal Procedure Act, No. 15 of 1979, shall apply where the defaulter issorequiredtogive
(7) Where a Magistrate directs under subsection (5) that a payment be made in installments anddefaultismadein
the payment of any one instalment, proceedings may be token as itdefaulthadbeenmadeinpayment,ofallthe
instalments then remaining unpaid.
Persons to whom gratuity shall be paid in certain circumstances.
9.Any payment of a gratuity due to a workman under this Act shall, in the event ofthedeathofthatworkmanbefore
receiving that payment, be paid to his heirs.
Gratuity to be computed favourable.
10. (1) Where the gratuity payable to a workman is governed by a collective agreement, award of anIndustrialCourtor
arbitrator under the Industrial Disputes Act or any other agreement, the computation of such gratuity in respect of his
services shall be made in accordance with the terms of such collective agreement,awardofanIndustrialCourtor
arbitrator or other agreement as the case may be, provided that the gratuity or terminal benefits set outthereinare
more favourable to the workman than the gratuity payable under this Act.
(2) No workman shall be entitled to a gratuity or terminal benefit in terms of any collective agreement, award ofan
Industrial Court or arbitrator or other agreement in addition to the gratuity under this Act or vice versa.
Power of Commissioner and other officer to enter and inspect promises.
11. (1) The Commissioner or any other officer authorized in that behalf by him in writing forthepurposeofcarrying
out the provisions of this Act, may"
(a)enter and inspect at all reasonable hours by day or night any premises or place for examining anybooksor
documents relating to the computation of gratuity under this Act
(b)make copies of or take extracts from any entries in any such books or documentsand
(c)examine any person who he has reasonable cause to believe is an employer or a person whohasmadedefault
in the payment of any sum under this Act.
(2) No person shall obstruct or resist the Commissioner or any officer authorized by the Commissioner inwritingin
the exercise of any power under subsection (1).
Power of Commissioner to call for registers and records.
12. The Commissioner or any officer authorized in that behalf by him in 'writing may directinwritinganyemployerto
produce for his inspection, at such time and place as may be specified in thedirection suchbooksanddocuments,
relating, to the computation of gratuity due under this Act in respect of any, workman ofthatemployer.asmaybe
indicated in the direction and that employer shall comply with that direction.
Forfeiture of gratuity.
13.Any workman, to whom a gratuity is payable under Part II of this Act and, whoseserviceshavebeenterminatedfor
reasons of fraud, misappropriation of funds of the employer, willful damage to property of the employer, or causing the
loss of goods, articles or property of the employer, shall forfeit such gratuity to the extent of thedamageorloss
caused by him.
Present employer to count services of workman under past employer in certain circumstances.
14. Where an employer sells or otherwise alienates any land or establishment within a period of five years of hisbecoming
such employer, the period of service of any workman under that employer shall be added to the period of service of that
workman under the new employer in computing the gratuity payable to that workman by the new employer.
15. (1) Any person, who contravenes or fails to comply with any provision of this Act shall be guilty of anoffenceand
shall, on conviction by a Magistrate, be liable to a fine not exceeding fivehundredrupeesortoimprisonmentof
either description for a period not exceeding six months or to both such fine and imprisonment.
(2) Where an offence under this Act is committed by a body of persons then"
(a)if the body of persons is a body corporate every , person who at the time of the commission of thatoffence
was a director or officer of that bodyor
(b)if the body of persons, is other than a body corporate every person who at the timeofthecommissionof
the offence was a member of that body, shall be deemed to be guilty of such offence: Provided, however, that such
director, officer or member shall not be deemed to be guilty of that offence if he proves thattheoffencewas
committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
Where the accused proves that some other person is guilty of the offence.
16. Where a person (hereinafter referred to as "the accused ") is charged with an offence under this Act,heshall,upon
complaint duly made by him in accordance with the provisions of section 136 of the Code of Criminal Procedure Act,No.
15 of 1979, and on giving to the prosecution not less than three days notice of his intention, be entitled to haveany
other person whom he charges as the actual offender brought before the court, andif,afterthecommissionofthe
offence has been proved, the accused proves to the satisfaction of the court that the commission of the offence was due
to the act or default of such other person, such other person may be convicted oftheoffence,andiftheaccused
further proves that he has used all due diligence to enforce the provisions of this Act, he shall be acquittedofthe
Amendment of Chapter 131.
17. (1) Section 31B of the Industrial Disputes Act is hereby amended"
(a) in subsection (1) of that section, as follows: "
(i)by the substitution, for paragraph (b) of that subsection, of the following paragraph:"" (b) thequestion
whether any gratuity or other benefits are due to him from his employer on termination of hisservicesandthe
amount of such gratuity and the nature arid extent of such benefits, where such workman has been employed inany
industry employing less than fifteen workmen on any dateduringtheperiodoftwelvemonthsprecedingthe
termination of the services of the Workman who makes the application or in respect of whom the ,applicationis
made to the tribunal "
(ii) by the relettering of paragraph, (c) of that subsection as paragraph (d) thereof
(iii)by the insertion immediately after paragraph (b) of that subsection of the following new paragraph:"
" (c) the question whether the forfeiture of a gratuity in terms of the Payment of Gratuity Act, 1983, hasbeen
correctly made in terms of that Act " and
(b) in subsection (6) of that section, by the substitution, for paragraph (c) of that subsection,ofthefollowing
paragraph:""(c) a labour tribunal may on any such application order such person to pay to thatworkmananysumas
wages in respect of any period during which that workman wasemployedbysuchperson,orascompensationasan
alternative to the reinstatement of that workman, and such order may be enforced against such person in like manneras
if he were such employer:
Provided, however, that in the case of such person who had employed less thanfifteenworkmen,inanyindustry,a
labour tribunal may in addition to the relief granted in the preceding provisions of this paragraph, order thepayment
of gratuity to such workman by such person.".
(2) Section 33 of the Industrial Disputes Act is hereby amended in subsection (i) of that section, by the substitution,
for paragraph (e) thereof, of the following paragraph: "" (e) as to the payment by any employer of a gratuity (except
where a gratuity is payable under the Payment of Gratuity Act, 1983) or pension or bonus to any workman, the amountof
such gratuity or pension or bonus and the method of computing such amount, and the time within which suchgratuityor
pension or bonus shall be paid.".
Amendment of the Land Reform Law.
18. (1) Section 32 of the Land Reform Law is hereby amended by the insertion, immediately aftersubsection(2)thereof
of the following new subsections:"' (3) Where a person is entitled to compensation under subsection (1) in respect of
any agricultural land vested in the Commission, the Chairman of the Commission shall, after reasonable, notice tosuch
person pay from the amount of such compensation, to the Commissioner of Labour, any sum certified under the hand of the
Commissioner of Labour totheCommission,tobeduefromsuchpersonasarrearsofsalary,providentfund
contributions, gratuity or other monetary, benefits to any person employed onsuchland.Forthepurposeofthis
subsection the expression " compensation "includes any interest which has accrued due on such, compensation.
(4) The sum paid by the Chairman of the Commission on the certificate issued bytheCommissionershallbeafirst
charge on the compensation payable to the employer.
(2) The amendments made to section 32 of the Land Reform Law. by subsection (1) of this,section,shallbedeemed
)to have come into operation on August 26, 1972.
Amendment of Chapter 460.
19. Section 17 of the Land Acquisition Act is hereby amended by the insertion, immediately after subsection (4) thereofof
the following new subsections: -' (5) Where a person is entitled to compensation under subsection (1) inrespectof
any land which has been acquired under this Act, the acquiring officer shall, after reasonable noticetosuchparson
pay from .the amount of such compensation, to the Commissioner of Labour, any sum certified underthehand,of,the
Commissioner of Labour to the acquiring officer to be due fromsuchpersonasarrearsofsalary,providentfund
contributions, gratuity or other monetary benefits to any 'person employed onsuchland.Forthepurposeofthis
subsection the expression "compensation " includes any interest which has accrued due on such compensation.
(6) The sum paid by the acquiring officer on the certificate issued by the Commissioner shall be a first charge onthe
compensation payable to the employer'.
20. In this Act, unless the context otherwise requires-
"acquiring officer'' shall have the same meaning as in the Land Acquisition Act
"'agricultural land " and "estate land" shall have the same meaning as in theLandReformLaw approvedprovident
fund" means a provident fund declared to be an approved provident fund under, Part-IV of the Employeesprovidentfund
Act No. 15 of "collective agreement" shall have the same meaning as in section 5 of the Industrial Disputes Act
" Commissioner" means the person for the time being holding the office of the Commissioner of Labour and includesany
person for the time being holding the office of Deputy or Senior Assistant or Assistant Commissioner of Labour, or 'any
"completed service" means uninterrupted includes servicewhichisinterruptedbyapprovedleaveonanyground
whatsoever, a strike or lock out or cessation of work not due to any faultoftheworkmanconcerned,whethersuch
uninterrupted or interrupted service was rendered before or after the coming into operation of this Act.
" employer " means any person who employs or, on whose behalf any other person employs any workman and includes a body
of employers (whether such body is a body corporate or unincorporated or a public corporation) oranypersonwhoon
behalf of any other person employs any workman and any person or Body of employers who or which hasceasedtobean
employer but does not include a co-operative society established under the Co-operative Societies Law. No. 5of1972,
or a local authority:
" Employees' Provident Fund " shall have the same meaning as in the Employees' Provident Fund Act. No. 15 of 1958
"Indian repatriate'' shall have the same meaning as in the Payment of Gratuities and other Monetary Benefits toIndian
Repatriates (Special Provisions) Law, No. 34 of 1978.
" industry " includes"
(a) trade, business, manufacture and agriculture, any undertaking or occupationbywayoftrade,business,
manufacture or agriculture, and any branch or section of trade, business, manufacture or agriculture:
(b)service, work or labour of any description whatsoever performed by persons intheemploymentofaLocal
Authority, or of a Corporation established by or under any written law for carrying on an undertaking whether for
the purpose of trade or otherwise.
(c)every occupation calling or service of workmen, and'
(d) every undertaking of employers
"labourer'' means any labourer or kangany whose name is borne on an estate register and includes anypersonwhohas
ceased to be a labourer
"Land Reform Commission"' shall have the same meaning as in the Land Reform Law
"Land Reform Law " means the Land Reform Law, No. 1 of 1072, as amended by Law, No. 39 of 1975, Act, No. 14of1981.
and the Land Reform (Special Provisions) Act, No. 39 of 1981
" legal representative " means the executor or administrator or in the case of an estate belowthevalueoftwenty
thousand rupees the heirs who have audited the inheritance
" local authority " means any Municipal Council, Urban Council, Town CouncilorVillageCouncilandincludesany
Authority created and established by or under any law to exercise, perform or discharge powers,dutiesandfunctions
corresponding to or similar to the powers, duties and functions exercised, performed or discharged by any such Council
" public corporation'' means any corporation, board or other body which was or is established by or under anywritten
law other than the Companies Ordinance or the Companies Act, No. 17 of 1982, with funds orcapitalwhollyorpartly
provided by Government by way of grant, loan or otherwise
" wage or salary " means"
(a)the basic or consolidated wage or salary
(b)cost of living allowance, special living allowance or other similar allowanceand
"workman" means any person who has entered into or works under a contract with an employer inanycapacity,whether
the contract is expressed or implied, oral or in writing and whether it is a contract of service orofapprenticeship
or a contract personally to execute any work or labour and includes anypersonordinarilyemployedunderanysuch
contract whether such person is or is not in employment atanyparticular,time,andincludesanyworkmanwhose
services have been terminatedand. '" year " means a completed period of twelve months.