The Gist of the Karnataka Compulsory Insurance Rules, 2024

Exercising the powers conferred under Sec 4A (4) of the Payment of Gratuity Act, 1972, the Government of Karnataka has released a notification making rules called ‘Karnataka Compulsory Insurance Rules, 2024’;

  • The rules are made mandatory for every employer / establishment for whom / which the Payment of Gratuity is applicable;
  • The said rules would be applicable to all the employers for whom the appropriate Government is the Government of Karnataka under Payment of Gratuity Act;
  • The notification would not be applicable to employers though having operations in Karnataka but for whom the appropriate Government is the ‘Central’;

The establishments which are in existence already shall obtain insurance policy from LIC of India or any other approved insurer within 60 days from the date of commencement of rules ( ie., before 10th March 2024 );

The new establishments (establishments which come into being after the commencement of the rules) shall obtain insurance within 30 days;

Every employer shall submit an application in Form-I to get his establishment registered with the Controlling Authority within thirty days from the date of obtaining insurance along with the list of its employees insured in Form III;

Every employer shall submit Form III to the Controlling Authority whenever there is a change in the employees insured or policies or any other pertinent information;

The employers who have obtained valid insurance policy shall exercise all due diligence for on-time payment of the premium and renewal of the policy and shall intimate the same to the Controlling Authority within fifteen days from the date of renewal of the policy;

Every employer who had already established an approved gratuity fund and desires to continue such arrangement and every employer employing five hundred or more persons who establishes an approved gratuity fund shall submit Form II to the controlling authority, provided such existing approved gratuity fund covers the entire liability of all the employees of the establishment under the provisions of the Act;

Every employer who had duly established an Approved Gratuity Fund and who desires to continue such arrangement and every employer employing five hundred or more persons who establishes an Approved Gratuity Fund shall register the Gratuity Trust with five but not equal number of representatives of the employer and employees with the registration authority;

The gratuity trust shall be managed privately or by the insurance company or jointly by paying the calculated amount to the approved gratuity trust fund periodically by the employer;

The gratuity trust shall maintain separate gratuity fund with the contributions only from the employer;

No money shall be withdrawn from the Gratuity Fund either by the employer or by the gratuity trust under any circumstances for any other purpose other than for the payment of gratuity to the eligible employees;

The gratuity trust shall adhere to the Indian Accounting Standards 15 (Employee Benefits) and any law applicable to the trust;

Where an employer fails to make any payment of premium/contribution to the insurance/to an approved gratuity fund, he shall be liable to pay the amount of gratuity including interest, if any, for delayed payments forthwith to the controlling authority;

Employer who contravenes the above provision shall be punishable with fine which may extend to ten thousand rupees and in the case of a continuing offence with a further fine which may extend to one thousand rupees for each day during which the offence continues.

Written by : S Muralidharan | Compliance Knowledge Hub

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