What is gratuity?
It has been rightly saidEvery employer believes that loyalty is a trait that must be awarded.
“Without loyalty, you won’t accomplish anything”
and every employer knows it pretty well.
Employers out of gratitude to their retired/retiring employees for their service honors them for their loyalty by giving them gratuity, a monetary payment. It is basically a type of a ‘retirement benefit’.
In Hindi, gratuity means “उपहार”. We can also call gratuity a gift, present, perquisite, etc.
Is there any law to protect employees?
Yes, there is an act called PAYMENT OF GRATUITY ACT, 1972
Does the act cover every kind of employer?
Following employers are covered under the Payment of Gratuity Act 1972 :
- Every factory, mine, oilfield, plantation, port, and the railway company.
- Every shop or establishment in which ten or more persons are employed, or were employed, on any day of the preceding twelve months.
Are all employees eligible to receive gratuity?
Employees who have rendered continuous service for not less than five years are eligible to receive gratuity. However, completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.
How Employee can estimate his amount of gratuity?
Eligible employees for every completed year of service or part thereof in excess of six months will get gratuity at the rate of fifteen days’ wages (Basic + DA+commission on T/O) based on the rate of wages last drawn by him.
For Ex. If Mr. Ramesh Sharma worked in a company for 6 years 7 months and his monthly wage was Rs 84000 (basic salary + DA ). Then he is eligible for the gratuity amount of Rs 294000/-
Can an employee claim gratuity lawfully?
Yes, every employee who has rendered five continuous years of service can lawfully claim gratuity.
Let’s have a look at steps that an employee should follow to get gratuity if his employer denies giving it.
Step 1: An application must be made to the employer within 30 days of exit from job to the employer in Form ‘I’. After submission of Form I, it is suggested to submit a bank passbook copy or canceled cheque along with it.
Step 2: After submitting Form I to the employer you will receive a notice in Form ‘L’ Notice for payment of gratuity.
Step 3: After receiving notice in Form L you will get your amount of gratuity as mentioned in Form L (See above).
We hope the above article will clear most of the doubts regarding gratuity in your mind. You can ask any query by making a comment below.