This act functions as a retirement benefit for the employees. The sum of accumulated amount is paid to the employee after his retirement.
The act is applicable to:
The payment of gratuity to the employee is mandatory, once the employee has served the establishment for at least 5 years. An employee becomes eligible to claim his Gratuity under The Payment of Gratuity Act, 1972 when he leaves the establishment. The reason for leaving may be resignation or retirement or can even be due to any medical condition caused by diseases of accidents and death.
Exception to the Rule: The criteria of completing the service of 5 years is not mandatory if, the cause of the termination of employment is
{(Basic salary + D.A) x 15 days x No. of years of service} / 26
However, under Section 4 (3) of The Payment of Gratuity Act, 1972 the maximum amount of gratuity to be paid by the establishment is fixed at ? 10,00,000/-.
Gratuity is a definite return plan for a worker for remaining consistent on his job for continuous five years. Gratuity is principally a kind of appreciation given by the organization. The word “Gratuity” is a word that comprises the rights, amenities, and facilities that are delivered, to all of the entitled workers. As per the rules and regulations, the government has not announced any fixed remuneration that the establishment requires to provide as honour, to the type of contribution, and the nature of obligation presented by the employee to the organization.
Below mentioned a few influenced instructions that make a staff member eligible for the gratuity upon departure from the company, it can be resignation or retirement.
Features that are vital in the process of Gratuity calculation
Compensation of Gratuity Act
As per the compensation of Gratuity Act, 1972, if the worker has continued his job with an establishment for at least equal to five years, he is entitled to attain gratuity.
The gratuity is settled in two circumstances to the worker:
Find here the prominent gratuity rules.
An employee or the nominee can protest to the official managerial complaint under the below mention conditions: -