Gratuity Payment: Gratuity is a lump sum amount that an employer pays to his employee when he leaves the company after working for at least 5 years. This amount is usually given when the employee leaves or retires, depending on how long he has worked. However, there are also some circumstances where the company may choose not to pay gratuity. Gratuity is a thank-you payment by an employer to his employee for his loyal service.
To get this payment, you have to work in the company for at least 5 years. This is a lump sum payment. There is also a law called the Payment of Gratuity Act, which ensures that this happens, and if something happens to the employee, his family gets this money.
Under the Payment of Gratuity Act, of 1972, employees are entitled to receive gratuity after completing 5 years of continuous service with the employer. Employees must have served for 5 years continuously in an organization to be eligible for gratuity. The organization should come under the Gratuity Payment Act, of 1972.
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When are you eligible for gratuity, know the rules
When you retire from your job.
If you quit your job after working for 5 years in the same company.
If you die or become disabled due to illness or accident while on the job.
When you are eligible for superannuation (a type of retirement benefit).
Organizational norms for gratuity
Organizations that have employed 10 or more employees in the past years and have complied with the Gratuity Payment Act, 1972 are required to pay gratuity.
How are service years calculated, know the easy way
You must complete at least 5 years of uninterrupted service to get gratuity, but once a person completes 6 months of service, it will be counted as a full year. The gratuity amount is calculated by taking into account the years of service of the employee and the basic salary received last time. If a company comes under the Gratuity Payment Act of 1972, it cannot stay away from it.
How much gratuity will a person earning 50 thousand salary get
To know the gratuity, you can use the formula (last salary x number of service years) x 15/26. Here 15 means 15 days salary every year and 26 means 30 days in a month excluding Sundays. In such a situation, if your salary is Rs 50 thousand and you have worked in a company for six and a half years, then you will get a gratuity of Rs 201923.
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