মঙ্গলবার, ৩১ জানুয়ারী, ২০২৩

Employee Gratuity Fund Rules and Specimen of Fund Formation Agreement

Gratuity fund law refers to the law which is constituted by government laws such as labor law, trustee law, etc., and through which the employees of an organization receive a certain amount of money after termination/resign or retire of employment subject to fulfilling certain conditions.


A sample of the fund formation agreement is given below:


ABC Company Limited Employees Gratuity Fund Rules

[June, 2023]

 1. Name of the Rules: These Rules shall be called the ".. .. …. Company Limited Employees Gratuity Fund Rules".

 2. Effective date: (These Rules shall come into force on 1st day of June 2023 irrespective of the date of approval by the National, Board of Revenue has accorded its consent. Notwithstanding the effective date of this rule, employees (who have been in service with the Company before the commencement of these Rules) shall also be entitled to the benefit of these Rules from the time of joining their services with the Company.

3. These Rules shall come into force on and from 1st day of June, 2023.

4. Definitions: In these Rules unless there is, anything repugnant in the subject or context:

a) "Company" shall mean .. … Company Limited.

b) The "Permanent Employee" or "Member" or "Employee" in the company shall mean and include an employee who's service is continuing after successful completion of his/her 6(six) months period as per the letter of employment and/or the service contract between he/she and the Company.

c) "Gratuity Pay" shall mean the basic monthly salary last drawn by the Employee and for consolidated salary, it shall be 50% of the gross salary.

d) "Service" shall mean continuous service with the Company according to last appointment.

e) "Total services" shall mean completed years of service only. A period of 12 (twelve) months shall be treated as a completed year.

f) "Dependent" means any of the following relatives of a deceased member namely, wife/wives or husband as the case may be, and sons, daughters and parents.

g) "Year" means a period of 365 days from the date of joining the service of the Company.

h) "Financial year" means period/year ending on 30th June of any year.

i) "Fund" means the … …. Company Limited Employees Gratuity Fund and shall consist of:

(i) Amounts received from the Company in each year representing one month's basic salary or such other sum as the Company may decide from time to time for each Employee.

(ii) Income generated from investment of Fund or from any other source.

(iii) Sums forfeited to the Fund.

j) Forfeited sums include any amount forfeited from an employee because of his dismissal from the service of the Company as per the Bangladesh Labour Act, 2006 or any other related laws.

k) "Gratuity" shall mean the pecuniary grant made to employees for their past service.

I) "Trustees" shall mean the trustees of the fund for the time being.

m) Words in masculine gender shall include feminine gender.

n) Words in singular shall include plural and vice-versa.

5. Conditions of Eligibility: Gratuity shall be paid by the Trustees out of the Fund to those Employees whose services with the Company shall cease on account of:

 4.1 In case of redundancy, discharge from service due to ill health, or for any other cause, or

 4.2 Voluntary resignation with the consent of the Company after completion of not less than five years of service, or

 4.3 Death or permanent total disablement while in the service of the Company, or

 4.4 Retirement after attaining the age of 60 years.

5. Administration of the Fund:

5.1 The Fund shall be administered by the Trustees. The Chief Financial Officer of the Company shall be the Chairman and the GM or DGM or Manager, Accounts & Finance Department shall be the Secretary of the Fund. The Trustees shall meet at such interval as the situation may dictate but not less than at least two times in every year.

5.2 The Trustees shall carry out the duties and perform all such functions as may be entrusted to them by the Company from time to time in relation to any matter with respect to which the Company has power under the Deed of Trust and the Rules of the Gratuity Fund. The Trustees shall pay to the beneficiaries upon their retirement, termination or dismissal from the services of the Company as per clause 7 of this Rule. 

5.3 The Chairman shall preside all the meetings of the Trustees and in his absence one of the Trustees shall be elected from amongst the Trustees present to preside that particular meeting. Three Trustees present shall constitute a quorum for any meeting of the Trustees. Each of the Trustees present at a meeting shall be entitled to one vote and in case of equality of votes the Chairman of the meeting shall have a casting vote. The decision of majority of the Trustees present at a meeting shall be a decision of the Trustees.

5.4 The decision of the Trustees shall be final and binding upon all members in all respect and upon aU matters, questions and disputes relating to or connected with these Rules or with the Fund or administration of the Fund or the nights or obligations of members including all disputes or difference which may arise between any member or his or her representative. 

6. Investments of Funds:

6.1 Out of the money received by the Trustees from time to time, the Trustees may keep such reasonable sum or sums, as they may decide, deposit the balance amounts in an account or accounts including term deposit account with any scheduled bank or banks or invest in any of the Government approved investment/saving schemes or land in such securities as they may consider appropriate subject to compliance with the provisions of Rule 580 read in conjunction with Rule 49 of the Income Tax Rules, 1984 or any modification or substitution thereof. Should the said account or accounts require replenishing at any time, the Trustees may in their discretion effect this by sale of investments in which the Fund or any part thereof may have been investee

6.2 The Trustees may from time to time by resolution authorize any two Trustees to sign or endorse for transfer, conversion or payment, any security held by the Trust and may by resolution authorize two or more Trustees to operate bank accounts and to endorse cheques, drafts, interest warrants or receipts and may authorize the Secretary to sign the receipts.

7. Payment of Gratuity:

7.1 The Employees who have completed a minimum of 12 (twelve) months continuous service with the Company, shall be eligible for a gratuity upon cessation of their employment for any reason other than dismissal for misconduct. All the existing Employees in the Company irrespective of their date of joining as a Permanent Employee shall be eligible for the payment of gratuity. The rate of gratuity payment shall be

7.1.1 After completion of 12 months in service, 1 basic salary for each year of service up to 10 years of service from the date of joining.

7.1.2 For a period of service exceeding 6(six) months in the last year of an Employee in service shall be treated as a complete year.

7.1.3 After completion of service of more than 10 years 1.5 basic salary for each year of service.

7.2 The Gratuity will be calculated based on the Employees last drawn basic salary for each completed year of service. The Company will start to deposit the employee's payable gratuity amount in "…… Company Limited Staff Gratuity Fund" in the bank. For a fractional period of work after completed year(s) a proportionate amount of gratuity will be added for the time.

7.3 No gratuity shall be paid to the Employees on temporary or part time status. Any contractual engagement with post retirement in …. Company shall not be eligible for this Fund.

8. Payment to Nominees:

In case of death of an employee, gratuity shall be paid to his/her dependents on the basis of nominations done by the Employee and in the absence of nomination as per law of inheritance 

9. Income Tax:

Income tax, if payable, under the laws of Bangladesh, for the time being in force, shall be deducted at the time of making payment of gratuity due to the employee or his/her dependents.

10. Books of Accounts: The Trustees shall maintain or cause to maintain proper books of accounts and prepare annual statement of accounts as at 30th June each year. Such accounts shall be audited by a firm of Chartered Accountants to be appointed by the Trustees for the purpose.

11. Limitation of Liability: No Trustees shall be personally liable or chargeable for any amount except for the money actually received by him/her nor shall be liable for the acts, defaults or neglects of any co-trustee nor for any loss unless the same happens through his/her own willful act or omission.

 12 Closure of Fund: This shall be govern by Clause XVIII of the Deed of Trust.

13. Nomination by Members: Each member shall fill up and sign in prescribed form as appended hereto clearly indicating his or her nominee or nominees. A member may change his or her nominee at any time.

14. Change of Rules

The forgoing Rules, or any other rules for the time being in force, may be altered, added to or re scanned as may be considered necessary by the Trustees subject to obtaining prior approval of the National Board of Revenue.

15. Repayments

15.1 Seventy Five Percent (75%) of the total accumulation individual balance of the fund may be permitted to non-refundable withdrawn based on the latest audited account at the discretion of the trustees of the fund those Member shall be completed at least fifteen years service to meet the expenditure on various grounds.

15.2 Hundred percent (100%) of the total accumulation individual balance of the fund may be permitted to non-refundable withdrawn based on the latest audited account at the discretion of the trustees of  the fund those member shall have completed at least 20(twenty) years service to meet the expenditure on various grounds

IN WITNESS WHEREOF, this Rules in establishment of ……….Company Limited Employees' Gratuity Fund is hereby signed and executed on the day, month and year first above written.


On be half of the Company
.......................................

The Trustee
1. ..............
2..............
3. ..............

Witness
1. .................
2. ..................

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