Right to Gratuity
Employees who have worked for 5 or more years are entitled to gratuity upon exit.
🗣️ What this means for you
If you have worked for an employer for 5 continuous years (or more), you are entitled to a lump sum gratuity payment when you leave, retire, or are terminated. The amount is calculated as 15 days of wages for each completed year of service. Even in cases of death or disability, gratuity is payable regardless of the 5-year rule.
Step-by-Step Action Plan
Submit Form I (application for gratuity) to your employer within 30 days of the gratuity becoming payable.
Calculate your gratuity: (15 × last drawn salary × years of service) ÷ 26.
If the employer does not pay within 30 days of it becoming due, the employer must pay simple interest.
File a complaint with the Controlling Authority (usually the Labour Commissioner) appointed under the Act.
The Controlling Authority will investigate and can direct the employer to pay within a specified period.
Maximum gratuity payable is ₹25 lakh (as per 2024 amendment).
⚖️ The Relevant Law
Payment of Gratuity Act, 1972 (1972)
Section 4
"Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years — on superannuation, retirement, resignation, death or disablement. The gratuity is calculated at the rate of fifteen days' wages based on the rate of wages last drawn for every completed year of service."
⚠️ Punishment / Penalty
Employer who fails to pay gratuity faces imprisonment of not less than 6 months (extendable to 2 years) or fine not less than ₹10,000 (extendable to ₹20,000) or both under Section 9 of the Act. Interest is also payable on delayed gratuity.
Required Documents
- 📄Form I — Application for Gratuity
- 📄Appointment letter or employment proof
- 📄Salary slips for the last month
- 📄Proof of tenure (joining letter, experience certificate)
- 📄Relieving letter or termination letter
- 📄Bank account details for payment