Gratuity is a statutory benefit governed by Payments of Gratuity Act, 1972. Under the Act, it is an additional statutory benefit payable by the employer to their employees after completion of minimum years of service. The minimum level of benefit paid is 15 days’ pay for each completed number of years. The employee is eligible for gratuity benefit, either on:
- Permanent Total Disablement during service
- Death during service
- Resignation from service
The employer can also structure a gratuity benefit that is higher than stipulated in the statutory requirements.