Gratuity is part of the salary that you receive in gratitude for the service offered by him/her to the employer. Gratuity like other Statutory Benefits like Provident Fund and Pension Fund is received by the employee at the end of the tenure.
However in your Appointment Letter, Annual Increment letter you will find CTC includes the Gratuity as well. In fact in normal calculation comes out be 4.83% of your salary.
Now let’s have an in depth look into the Act and benefits for the employees’.
The Act is applicable to:-
Every factory, mine, shop, plantation, oilfield and any establishment governed by Shops and Establishment Act of the State.
Any establishment wherein 10 or more persons are employed, or were employed on any day preceding 12 months and which is so notified by Central Government.
Act is also applicable to Chamber of Commerce, Motor Transport, Local Bodies and Solicitors Offices employing more than 10 persons.
Every employee is entitled to receive gratuity irrespective of his/her wages after he/she has rendered continuous service for 5 years or more.
Gratuity is payable at the time of termination of his/her services, either i) On Superannuation, or ii) On Retirement or Resignation or iii) On death or disablement due to accident or disease.
However condition of 5 years continuous service is not necessary if service is terminated due to death or disablement.
Continuous Service:- Meaning
An employee is considered to have rendered continuous service if,
If he/she has been in uninterrupted service, including service interrupted by sickness, accident, absence from duty with or without leave, lay off, strike, lockout, or cessation of work not due to the employees’ fault.
Provisions of this Act are enforced by both the Central and State Governments.
Deductions Permissible from Gratuity
Gratuity of an employee whose services have been terminated for any willful omission or negligence causing any damage, loss or destruction of Employer’s Property, can be reduced to the extent of such damage.
Gratuity may be wholly or partly forfeited if the termination of service is due to employees’ riotous or disorderly behavior or any offence of moral turpitude committed in course of employment.
Every employee is required to submit his nomination in the prescribed form in duplicate to his employer, within 30 days of the completion of one year of service.
Time Limit for Applying and Payment
Employee should within 30 days of Gratuity becoming payable apply in prescribed form. The application should be sent to the employer.
However in case of superannuation or retirement application can be made even 30 days before such date.
A Legal heir may apply within one year from the date gratuity becomes payable.
Employer should pay the gratuity within 30 days from the date it becomes payable or after such date along with Simple Interest of 10% p.a.