What does gratuity mean?

Gratuity refers to the amount that an employer pays his employee, in return for services offered by him to the company. However, only those employees who have been employed by the company for five years or more are given the gratuity amount. It is governed by the Payment of Gratuity Act, 1972.

The employee can get the gratuity before five years if he/she gets disabled in an accident or due to a disease. Gratuity mainly depends on your last drawn salary and the years of service which are rendered to the Company.

To receive the gratuity, you must meet the following eligibility criteria:

  • You should be eligible for superannuation.
  • You should have retired from service.
  • You should have resigned after continuous employment of five years with the company.
  • In case of your death, the gratuity is paid to the nominee, or to you on disablement on account of a sickness or an accident.

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