Gratuity, derived from the word gratitude, is a sum of money paid by your employer for all the work you have done for them over the period of time.
Gratuity is paid based on the number of years you have been in service with current employer, multiplied by 50% of last drawn salary.
In order to receive gratuity, you need to be eligible under one of the following criterias:
1.) You should have worked continuously under the employer for a minimum of 4 years and 240 days
2.) Or, you should have reached superannuation
3.) Or you should be retiring from the job having reached the companies retirement age
4.) Or, passed away
5.) Or, incapacitated/disabled due to an accident or illness
6.) Or, you have been retrenched or laid off by the company
Gratuity = Y*S*(15/26). Here Y is the number of years you have been working with this employer
S is the last salary you received
4 years and 240 days is the minimum period you should have been with the employer to be eligible for gratuity payment
Gratuity Act, under Section 4(3) states that the maximum amount of money that can be paid is Rs.20 Lakhs. Companies can however choose to pay you the complete amount you are due or higher than Rs.20 Lakhs as a moral obligation (ex-gratia). This entirely at the discretion of the company.
Yes, if you have been working for 6 years and 8 months, your number of years of service will be 7 years. On the other hand, if you worked for 6 years and 4 months, your years of service will be 6 years.
Yes. If you are a Government employee or work for a company that falls under the Payment of Gratuity Act, your gratuity will be completely exempted from Tax. If you are not, then the lowest of a.)20 lakhs, b.)Actual gratuity received will be exempted from being taxed.
No, you need to have worked for 5 years (4 years and 240 days minimum) in one company at a stretch
No, you will be able to receive gratuity even if you have taken a sabbatical. The period you were on sabbatical will be considered for Gratuity calculation.
The money needs to be paid by the employer
Your employer needs to pay out the gratuity within 30 days of you resigning the organization.
Yes, as long as the contract employee or part time staff is on payroll of the company as an employee, he/she is eligible to receive the gratuity cash
Interns and apprentices are usually not on the records of the company as an employee and receive a stipend instead of a salary. As such they are not eligible for gratuity money.
Yes, if an employee dies, the legal heir can receive the gratuity amount from the employer.