Gratuity
A statutory lump-sum payment made by an employer to an employee on termination after a qualifying period of continuous service.
Detailed Meaning
Gratuity is payable to an employee on the termination of employment (by superannuation, retirement, resignation, death, or disablement) after they have rendered continuous service for a statutorily prescribed minimum period, calculated according to a formula based on last-drawn wages and years of service.
Authoritative Sources & Provenance
Relevant Legislation
- The Payment of Gratuity Act, 1972
Frequently Asked Questions
Who is eligible for gratuity?
Under the Payment of Gratuity Act, an employee is generally eligible for gratuity after completing five years of continuous service with an employer, payable on retirement, resignation, or termination (with the five-year requirement relaxed in cases of death or disablement).
Related Concepts
General legal information for reference only, reviewed for accuracy but not a substitute for advice from a qualified advocate on your specific facts.