The Payment of Gratuity Act 1972:- Gratuity is a voluntary Payment made by the employer to the employee in recognition of continuous, meritorious services and sincere efforts by the employee towards the organization.It is governed under the Payment of Gratuity Act 1972.It  is  an  Act  to  provide  for  a  scheme  for  the  payment  of gratuity  to  employees  engaged  in  factories,  mines, Oilfields, plantations, ports, railway companies, and shops or other establishments.

Applicability:-As per the Gratuity Act, the scheme for the payment of gratuity is available to:

  • Employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental with.
  • Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
  • Such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

Employee :-The term “employee” is defined in Section 2(e) of the Act as any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;’.

Gratuity Entitlement :-Gratuity is payable to an employee (nominee – in case of death of employee) who has rendered continuous service of five years or more on his termination of employment, superannuation, retirement or resignation. Completion of continuous service of five years is not necessary where the termination of employment is due to death or disablement due to accident or disease.

Exceptions:-Forfeiture of gratuity amount wholly or partially or to the extent of Damage /loss in case of an employee whose service has been terminated for:

  • Any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer; or
  • Act of riotous or disorderly conduct or any other act of violence on part of employee; or
  • Any act which constitutes an of­fence involving moral turpitude, in the course of his employment.

Nomination:-In case of death, the gratuity is payable to any of the following persons:

  • Nominee
  • Heirs (in absence of nomination)
  • In case nominee/ heir is a minor, such amount will be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.

The Gratuity limit has been raised from 3.5 lakhs to 10 lakhs:-There  has  been  amendment  in  the Payment  of  Gratuity  Act  1972,    following  proposal  of  Labor  and Employment  Ministry,  demands from  trade  unions  and  others  to remove  the  ceiling  or  increase the maximum  payable  amount,  which was fixed in 1997. It shall come into force on 24 May 2010 as  per  the  Notification  in the Official Gazette.

Maximum Limit :-The Gratuity limit as per Section 4(3) has been raised from 3.5 lakhs to 10 lakhs. This will give advantage to both private and public sector employees. According to this new amendment, the maximum gratuity exemption as per IT Act also increases to Rs. 10,00,000.

Determination of Gratuity Amount

  • For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned.
  • The Gratuity calculation is done as per the last average remuneration drawn and time in years served by an employee.
  • The amount of gratuity payable to an employee shall not exceed Rs. 10,00,000 (increased from Rs. 3,50,000).
  • In order to compute the gratuity payable in case of employees em­ployed in seasonal establishments, daily wages, or piece rated employ­ees. Computation will be as per the provision of the Act.
  • It can be formulated as follows: Basic + DA (Wages Last drawn)* 15days 126 * number of years of continuous service (six months or less to be ignored and more than six months to be counted as full year)
TIME LIMIT / FORMS FOR APPLICATION TO BE MADE TO EMPLOYER
Sr. Particulars Form Timeline Compliance by
1. Nomination F 30 days after completing 1 year service Employee
2. Application for Gratuity
  • on gratuity be- coming payable to the employee
I 30 days from the date of gratuity becoming pay-able Employee
  • on gratuity be- coming payable to the nominee
J 30 days from the date of gratuity becoming pay-able Nominee
  • on gratuity be- coming payable to heir
K 1 year from the date of gratuity becoming pay-able Legal Heir

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207 Comments

  1. opbhatt says:

    sir i was lecturer physics in private school which was take over by govt of nct delhi by admistator nominee of director of edcation of delhi bur mean while same school was completly take over by govt and govt pay all dues from 2011 but our service book and payfixation done from1997 and i retiered in2021 . sir from which date i can got graiguty.

    1. Vicky says:

      Sir, my mother was teacher in private school from 1979 and left in 2011. At the time of leaving School did not released Gratuity to my mother, as she didn’t have knowledge. Then we applied in 2020 for release of Gratuity amount but School is saying that you are eligible from 03-04-1997 not from the 1979. Can you please confirm from when my mother is eligible to take the Gratuity. Please email us any Govt. Notification if it is applicable from retrospective effect i.e. 1979 for the whole period. Thanks

  2. Kaushik says:

    I had joined a private company on 01.04.2018 when the company was also started, Now after a continuous service of 3 years, due for retirement on 31.03.2021, after attaining the age of 58 yrs. Here as per company’s policy the retirement age is 58. Am I entitlement for Gratuity ? pls advise

  3. Kaushik says:

    I had joined a private company on 01.04.2018 when the company was also started, Now after a continuous service of 3 years, due for retirement on 31.03.2021, after attaining the age of 58 yrs. Here as per company’s policy the retirement age is 58. Am I entitlement for Gratuity ? pls advise

  4. Navin says:

    🔴🔴🔴🔴🔴🔴🔴🔴🔴🔴🔴🔴🔴I worked in an Organisation called ICRISAT (International organization as a contract employee with consolidated pay. I completed 6years continues service without break, as per the Gratuity act I am eligible for gratuity. But my employer is rejecting to pay the Gratuity pay with reason ( consolidated pays are not eligible for gratuity in international organisations) Am fighting with the organisation for cause not for Money. Because so many employees are completed more than 5 years service but they are not eligible for any benifits atleast PF. So kindly support wit your suggestions in this matter. 9533454523.

  5. Navin says:

    I worked in an Organisation called ICRISAT (International organization as a contract employee with consolidated pay. I completed 6years continues service without break, as per the Gratuity act I am eligible for gratuity. But my employer is rejecting to pay the Gratuity pay with reason ( consolidated pays are not eligible for gratuity in international organisations) Am fighting with the organisation for cause not for Money. Because so many employees are completed more than 5 years service but they are not eligible for any benifits atleast PF. So kindly support wit your suggestions in this matter. 9533454523.

  6. Nikita Ratwani says:

    Hi, I resigned from an IT company after serving 4 years 9 months 10 days of service (4 years 282 days) The company works 5 days a week. When I claimed gratuity amount, the company denied saying I haven’t served full 5 years in the company. Please advise how should I proceed and get the gratuity amount from the company.
    Appreciate your quick response.
    Thanks.

  7. A S rawat says:

    I had joined PSU on Feb-1983 to Jan-1986 as a daily wages/contract basis and got confirmed the service in same PSU on FEB-1986 and I was retired from PSU in Mar-2018. PSU counted the gratuity period of 32 yr. but I was worked 35 yrs. Pl guide me I eligible to get gratuity 32 or 35 yrs. Pl. advise me.

  8. Rakesh kumar says:

    An undertaking State Public Limited Company wants to apply Gratuity Scheme for contactual and temporary employee engaged in more than five years of service, Whether it is legally permisible or not?

    If yes, then deduction will start from date of joining or from implementation date?

  9. nbhaskaran53 says:

    1) Can an Employer (Bank) extend credit facility to its employees by taking undertaking from them to recover it from gratuity payment? 2) Can it be treated as secured and can loan be recovered by the employer upon the retirement? 3) What would be consequence if such employee die during the employment and the nominee claims entire gratuity amount due to the employee?

  10. Do not wish to disclose says:

    My organisation is selling one of its business and asking us to resign and join the new organisation without continuity of service.

    I have completed 3.5 yrs in the current organisation and ideally not eligible for gratuity as per the criteria.

    However I wish to know that is there any provision for partial payment for the number of years completed in this scenario where the company is asking us to leave the organisation.

  11. Sayantan says:

    Hi,
    I have been in a news organisation for more than five years now. I have heard that the organisation only pays gratuity to those who have completed a tenure of minimum 10 years? Is it allowed to do that? Can I claim gratuity payout as I have completed more than 5 years of continuous service? Would be grateful if someone can clarify this.
    Regards

  12. Shaji P.P says:

    I had 12 years service in Kerala State service.In 2004 I joined in Kerala state Electricity Board.ext year I will retire from service.Will my state service count for gratuity in kseb?

  13. Narayan J.Bahekar says:

    While working in the Bank since 1.04.1970.From time to time I got the promotion and I was posted as Branch Manager in Nagpur from 1st June, 1993 and kept me in the same branch till 05.01.2000 and as penalty, I was dismissed and struggling for my retirement benefits such as gratuity,PF & leave encashmnet.I had to file my case Asst.labour comm.where order was passed in my favour.Bank appealed in RLC where therealso order in my favour.When gratuity amount was credited in my savings account.But lien marked in my Savings bank account because of some loan amount was outstanding against me.Since my dismissal, I was jobless since 5.01.2001 having no earning.When Gratuity amount was credited, my loan amount raised due to interest application for 17 years.Please advise me under the circumstances as to whether my entire amount will be adjusted against my Gratuity amount.What is the remedy in such case.

  14. sunil says:

    My friend was resigned from a private un aided cbse school, after 10 years of service as a teacher. The management refused to give gratuity. Is a private un aided cbse school teacher has no right to claim for gratuity?

  15. Nilesh P says:

    Hello All,

    I had resigned my last company 3 year ago after working 1 & half year and I got some amount as a gratuity in Full & Final Settlement.

    As per the rule I was not eligible to avail Gratuity. Under which circumstances they given the amount as gratuity.

    Can anybody throw some light.

    Regards,

    Nilesh

  16. STANLEY says:

    Sirs,
    I have completed 7 year service in Pltd company in Mumbai and resigned with one month notice.
    It would be appreciable to here from you the calculation procedure.
    Being a Private sector,my salary slip spl. allowance is more than my basic.
    I was told even honorable high court of Mumbai also gave verdicts,while calculating Gratuvity spl allowance need to be added as for as p jobs are concerned.
    But I could not get a clear reference to it .Please help.

  17. Vijaykumar says:

    Dear Sir

    Presently I am working in a Small scale Partnership Firm from last 10 year and there are working below 9 person with provident fund is applicable to all. So please tell me is it applicable gratuity act for this firm.
    Please confirm me.
    Vijaykumar

  18. JOBY says:

    My Brother is retiring from a private firm, every year he was in No pay leave for 20-25 days. Is this effect his Gratuity. Because his total No pay leave for 10 year is around 250 days.

  19. Kaush Dudhat says:

    Sir,

    Could you please advise Can i Appoint my Dependent sister as Nomination as i am unmarried and my Mother is already crossed 63 year. while looking at Family definition, unfortunatly it does not cover anything to appoint sister.

    Thanks & Regards,
    Kaush

  20. shiva says:

    Dear sir,

    I have joined on 08.11.2015.Working days in week 6 days. Kindly let me now if when resign the job will get gratuity.

    Thanking you
    Shiva

  21. Preeti says:

    Hi

    My friend had join a Private company as a part time employee for more then 5 yrs of service(since 2007 till date ),is he be applicable for Gratuity?

  22. PRIYANKO KUMAR SARKAR says:

    Dear Sir,

    This is to inform you that I am working in a Ltd co from 10/102006 to 26.09.2011 on purely temporary basis and company giving me the salary sleep,bonus pf.Please tell me can I eligble for Gratuity or not.

  23. Ravi Kumar says:

    Dear Sir

    I Had Worked More than 6 Years in a Company , I had Resigned my Job i June 2015, And i had Submitted the Gratuity Application for Payment, But Still now they are your payment is Pending.

    I Wanted to Know that how many days it will take to Recieve the Gratuity Payment after submitting all the documents…

    Please reply me .

  24. J.M.BAGGA says:

    I have rendered 39 years of service to the institution.When I retired in the month of August 2013 they counted only 33 years of service only,and they have released the gratuity only on the base of 33 years not 39 years.Where as it should be subject to maximum of Rs,10,00,000/- only. Kindly advise me what should i do so I can claim the balance amount of gratuity.

  25. Sukhi says:

    Whether a teacher who had put in 37 years of service from 1975 and retired in 2012 entitled to gratuity for 37 years i.e. from date of appointment or from 3rd April, 1997 as notified in 2009 under the Payment of Gratuity Act, 1972. Early guidance is solicited. regards
    Sukhi

  26. shreya says:

    Dear Team,
    I am working for a proprietorship firm Since July 2006 i.e near about 9 years till date Now i want to resign from my job for some reason.Can i be entitled for Gratuity.As till date we haven’t had any deduction for PF & also any other.How can i claim my gratuity from the company.Is it compulsory for any company to pay gratuity for the employer if they had completed 5+ yrs.pls guide……………Also pl.note we are getting our salary in cash.
    No. of employees on muster role is 8. Please suggest.

    – See more at: https://taxguru.in/income-tax/all-about-payment-of-payment-of-gratuity-act-1972-in-brief-including-the-recent-amendments.html#sthash.3vLqofqv.dpuf

  27. jatin somani says:

    If any employee retires after serving 39 Years of Service, can there be any restriction be forced statutory by considering his length of service to restrict Gratuity amount? I mean is there any provision about length of service to be considered on higher side, i.e. Maximum Years?

  28. Dominic Joseph says:

    I will be grateful if someone refer to my Face Book page:- Non Payment of Gratuity and let me know how to proceed to get the payment from the company.

  29. mani says:

    worked with an organization from 10th oct 2010 & resigned on 09 th july 2015. I have completed 4 years, 8 months & 8days. . shall i be eligible for gratuity? run by trust

    pls reply me

  30. mani says:

    worked with an organization from 10th oct 2010 & resigned on 09 th july 2015. I have completed 4 years, 8 months & 8days. . shall i be eligible for gratuity? run by trust –

  31. Musarif says:

    Sir,
    i resigned my previous company in feb 2007 after completing 4 years and 8 months. i did not receive gratuity from the company. Am i eligible for gratuity ?

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