Gratuity is paid to the employee for every completed year of service or part thereof in excess of si...........

Industrial Relation and labour law Industrial Relations

Gratuity is paid to the employee for every completed year of service or part thereof in excess of six months at the rate of 15 days wages based on last drawn wages by the employee. While calculating the 15 days wages, the number of working days in a month are taken as________

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Explanation:

A person is eligible to receive gratuity only if he has completed minimum 5 years of service with an organisation. However, it can be paid before the completion of five years at the death of an employee or if he has become disabled due to accident or disease. There is no set percentage stipulated by law for the amount of gratuity an employee is supposed to receive- an employer can use a formula-based approach or even pay higher than that. Gratuity payable depends on two factors: last drawn salary and years of service. To calculate how much gratuity is payable, the Payment of Gratuity Act, 1972 has divided non-government employees into two categories: a) Employees covered under the Act b) Employees not covered under the Act