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✔ Gratuity is a lump-sum benefit paid by an employer to an employee as a token of appreciation for their long-term service.
✔ It is applicable to organizations with 10 or more employees and becomes payable upon retirement, resignation, or termination.
✔ Employees are eligible for gratuity after completing at least five years of continuous service with the same employer.
✔ The gratuity amount is determined based on the employee’s last drawn salary and the total number of years served.
As per the Payment of Gratuity Act, 1972, any establishment with 10 or more employees must register with the appropriate controlling authority—typically the Regional Labour Commissioner—within 30 days of becoming liable under the Act.
Employers are required to fulfill various obligations, including timely payment of gratuity to eligible employees, proper record-keeping, displaying mandatory notices at the workplace, filing annual returns, and ensuring compliance with all regulatory requirements. Gratuity may be withheld in cases where employees resign or are terminated before completing five years of continuous service.
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