Gratuity

This is other kinds of retirement benefit to be provided to a worker either on retirement or at the time of physical disability & to the dependents of the dead employee. Gratuity is a reward to a worker for his long service with his current employer.

The Payment of Gratuity Act, 1972, is applicable to the establishment in the full country. The act provides for a plan of obligatory payment of gratuity by the managements of factories, mines, oil fields, railways, plantations, shops and other establishments employing 10 or more persons to their workers, drawing the monthly wages up to Rs 1,600 per month.

Gratuity is payable to all of the employees who render a minimum incessant service of five years with the current employer. It is payable to a worker on his superannuation, on his retirement or on his death or disablement due to accident or any serious disease. The gratuity payable to employee will be at the rate of 15 days wage for all of completed year of service on part thereof in excess of six months. Here the wage refers to the average of the basic pay last drawn by the worker. The maximum amount of gratuity payable to a worker shall not exceed from 20 months' wage.