Section 8 of Payment of Gratuity Act 1972 - Recovery of Gratuity

Section 8 of the former Payment of Gratuity Act, 1972 provided a statutory recovery mechanism where an employer failed to pay gratuity within the prescribed time. It enabled recovery on the basis of a certificate issued by the controlling authority.

Current legal position: The gratuity provisions of the Code on Social Security, 2020 operate in the labour-code regime from 21 November 2025. The former Payment of Gratuity Act, 1972 was repealed by Section 164 of the Code, subject to applicable savings. Recovery of unpaid gratuity under the current framework is dealt with principally through Section 129 read with Sections 130 to 132 of the Code, together with the applicable rules. For establishments in the Central sphere, the Social Security (Central) Rules, 2026 contain the prescribed gratuity procedure.

Meaning of recovery of gratuity

Recovery becomes relevant when gratuity that is legally payable remains unpaid. Under former Section 8, an aggrieved person could apply to the controlling authority. After giving the employer a reasonable opportunity to show cause, the controlling authority could issue a recovery certificate to the Collector. The Collector would then recover the certified amount, with the statutory interest, as arrears of land revenue.

Text of former Section 8 - Recovery of gratuity

8. If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto:

Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate:

Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.

How former Section 8 worked

1. Gratuity remained unpaidThe statutory recovery mechanism arose when gratuity payable under the Act was not paid within the prescribed time.
2. Application by aggrieved personThe person entitled to gratuity could apply to the controlling authority for recovery.
3. Employer heardBefore issuing the certificate, the controlling authority had to give the employer a reasonable opportunity to show cause.
4. Recovery certificateThe controlling authority could certify the amount due to the Collector.
5. Recovery as land revenueThe Collector recovered the certified gratuity and statutory compound interest as arrears of land revenue.
6. Interest ceilingUnder the second proviso, the recovery interest could not exceed the gratuity amount itself.

Current law - Section 129 of Code on Social Security 2020

Section 129 - Recovery of amount due: The current Code uses a general recovery machinery for arrears due under the Code. Where an amount is in arrear, the authorised officer or competent authority, as applicable, issues a certificate to the Recovery Officer specifying the arrears.

The Recovery Officer may recover the certified amount through statutory modes including attachment and sale of movable or immovable property, arrest and detention of the employer, or appointment of a receiver for management of the defaulter's movable or immovable properties, subject to the provisions of the Code.

Sections 130 to 132 supplement Section 129 by dealing with validity and amendment of recovery certificates, other modes of recovery, and application of specified Income-tax Act recovery provisions.

Application for recovery of gratuity under current Central Rules

For establishments for which the Central Government is the appropriate Government, the Social Security (Central) Rules, 2026 prescribe the gratuity procedure. Form IX is the application for recovery of gratuity before the competent authority. It is used where the employer has failed to pay the gratuity amount directed to be paid and the applicant seeks issue of a certificate under Section 129 for recovery.

The applicable authority and procedural rules can differ where a State Government is the appropriate Government. The relevant State rules and notifications should therefore be checked in State-sphere cases.

Recovery Officers for Central-sphere gratuity matters

By notification dated 12 May 2026, the Central Government appointed specified labour officers as Recovery Officers under Section 129 for recovery of arrears relating to Chapter V (Gratuity) and Chapter VI of the Code for establishments in the Central sphere, with jurisdiction allocated in the notification.

Important points for gratuity recovery

  • First establish the amount due: the gratuity entitlement and amount should be determined under the applicable provisions, including Section 56 where a dispute requires adjudication.
  • Use the correct competent authority: jurisdiction depends on whether the Central Government or a State Government is the appropriate Government and on the territorial notifications in force.
  • Use the prescribed form: Central-sphere matters are governed by the Social Security (Central) Rules, 2026; State-sphere matters may be governed by the relevant State rules.
  • Recovery is certificate based: Section 129 provides for a certificate specifying the arrears to be issued to the Recovery Officer.
  • Recovery powers are wider: the Code replaces the former Section 8 land-revenue mechanism with the consolidated recovery machinery in Sections 129 to 132.

Official legal resources

Ministry of Labour and Employment - Code on Social Security 2020

Official Code on Social Security 2020 PDF

Social Security (Central) Rules, 2026 - Official Gazette

Recovery Officers under Section 129 - Notification dated 12 May 2026

Ministry of Labour and Employment - Official Portal