Karnataka Rules for Compulsory Insurance covering Gratuity Liability

On 10 January 2024, the Government of Karnataka notified the Karnataka Compulsory Gratuity Insurance Rules 2024, which has come into force effective from the date of notification. 

As per the rules, every employer is mandatorily required to obtain insurance from LIC or any other insurance company incorporated under the applicable law for covering its entire liability to pay gratuity to its eligible employees. The insurance is to be renewed on a yearly basis under intimation to the controlling authority. 

The insurance is required to be obtained within sixty days (i.e. 10 March 2024) from the date of commencement of these rules (i.e. 10 Jan 2024). 

The employers are permitted to continue their existing gratuity fund subject to certain conditions and compliance. 

After taking the insurance, the employers are required to obtain registration in the prescribed manner. 

This move has been taken to ensure that the social security intended to be provided under the Payment of Gratuity Act is made secure and remains available to employees in all circumstances including insolvency, etc. 

For queries, please write to vinita.sahitya@lexfulcrum.com