Moreover, leveraging the authority granted by Section 4A (4) of the Payment of Gratuity Act, 1972, the Karnataka government has issued a crucial notification, unveiling the ‘Karnataka Compulsory Insurance Rules, 2024.’ This strategic move not only showcases the government’s dedication to structured regulations but also emphasizes the paramount importance of legal adherence and the reinforcement of financial security for both employers and employees. Additionally, these rules mark a pivotal shift in the landscape of gratuity management, reflecting the state’s unwavering commitment to employment welfare and a well-defined compliance framework.
Karnataka Government’s Authority Action:
The Karnataka government, under Section 4A (4) of the Gratuity Act, has proactively issued the ‘Compulsory Insurance Rules, 2024,’ regulating gratuity-related matters.
Wide Applicability:
These rules, inclusive for all employers governed by the Payment of Gratuity Act in Karnataka, ensure comprehensive coverage of entities operating within the state.
Jurisdiction Clarity:
This provision specifies that the rules pertain to employers under the purview of the Karnataka Government, providing clarity on the jurisdiction where these regulations apply.
Insurance Deadline:
To comply with the rules before the March 10, 2024 deadline, existing establishments must secure a Life Insurance Corporation (LIC) policy within 60 days.
Registration Mandate:
Facilitating efficient compliance, employers must promptly register using Form-I within thirty days of obtaining insurance.
Quick Reporting:
To ensure transparency and adherence to regulatory requirements, employers must promptly report any changes in insured employees or policies to the Controlling Authority.
Premium Management:
Promoting financial integrity and consistency, employers are strongly advised to manage premium payments and policy renewals in a timely manner.
Gratuity Fund Compliance:
Emphasizing transparency in fund management, large employers with existing or new gratuity funds must submit Form II to ensure compliance with the rules.
Trust Requirements:
To promote fairness and accountability, employers opting for gratuity funds must undergo mandatory registration, ensuring equal representation from both employers and employees.
Flexible Trust Management:
Allowing for private, insurance, or joint management options based on the preferences and needs of employers, the rules offer flexibility in the management of gratuity trusts.
Contributions and Withdrawals:
Ensuring the fund’s dedicated use, contributions to the gratuity fund are exclusively made by the employer, and withdrawals are strictly reserved for gratuity payments to eligible employees.
Adherence to Standards:
Ensuring a standardized and compliant approach to financial management, the gratuity trust must adhere to Indian Accounting Standards 15 and other relevant laws.
Non-Payment Consequences:
To avoid consequences and ensure the financial well-being of employees, employers failing to make payments are obligated to settle the gratuity amount, including interest, immediately.
Penalties Alert:
Acting as a deterrent to non-compliance and reinforcing the seriousness of adhering to the regulations, violations of the rules may result in fines up to ten thousand rupees, with additional daily charges for continuing offenses.