Gratuity PaymentGratuity Gratuity Payment

March 23, 2016 at 06 : 23 PM

Gratuity payment is a lump sum that your company will pay you as an acknowledgement of your loyalty to the company. Naturally, gratuity becomes payable only after you have spent a certain number of years with the company. You will receive this benefit either at the time of retirement or when you resign from employment. There are two conditions that must be satisfied in order to be eligible to get the gratuity benefit:
  1. Your organization has a minimum of 10 people on payroll, i.e., at least 10 employees receiving salaries from the organization. Note that people on contract are not considered.
  2. You have completed at least 5 years with the organization. 
If an employee dies during the tenure of his employment or if employee is terminated due to disablement, then the 5-year rule is relaxed. So, even if such employee’s period of service is as little as 1 year, he/she will be eligible to receive gratuity if the first condition is met. According to the law, the amount payable as gratuity is equivalent to half month’s salary for every full year of your employment or Rs. 10 L, whichever is lower. This is the minimum amount payable under the law. Some companies may pay a higher amount. This upper limit depends upon the company’s policy. For example, if you have put in 10 years of service before you resign from the company, you are entitled to the amount equal to 5 months’ salary or Rs. 10L or more (limit set by company). Intelli Payroll software does this calculation automatically.

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