Gratuity is a benefit which is payable under the Payment of Gratuity Act 1972. Gratuity is a sum of money paid by an employer to an employee for services rendered in the company. But, gratuity is paid only to employees who complete five or more years with the company
What is Gratuity in salary?
Gratuity is a financial component offered by an employer to an employee in recognition of his/her service rendered to an organisation. It is a part of the salary an employee receives and can be viewed as a benefit plan designed to aid an individual in his/her retirement.
Gratuity is paid by an employer when an employee leaves the job after serving the same organisation for a minimum period of 5 years. One can consider it to be a financial “Thank you” to an employee for rendering continuous service to an employer
Gratuity Eligibility
Following are the few instances when you will be eligible to receive gratuity.
An employee should be eligible for superannuation
An employee retires
An employee resigns after working for 5 years with a single employer
An employee passes away or suffers disability due to illness or accident
