Payment of Gratuity

Definition

Establishments with 10+ employees must pay gratuity (15 days of wages for every completed year) on superannuation, resignation (after 5 years) or death/disablement. Maximum gratuity is Rs 20 lakh.

• SourcePayment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) — Sections 4, 4Alabour.gov.in

What it means in practice

Payment of Gratuity is administered by Ministry of Labour & Employment. The obligation is grounded in Payment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) (Sections 4, 4A).

Compulsory insurance via LIC or recognised insurer under Sec 4A — relevant for new establishments. Fixed-term employees now get pro-rata gratuity without 5-year requirement.

• SourcePayment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) — Sections 4, 4Alabour.gov.in

Triggers (applicability predicates)

These predicates are evaluated by Compliance Radar's applicability engine against a business profile to decide whether this rule applies.

• employee_count>=10

Deadlines and penalty

Cadence: ongoing

Penalty for default: Non-payment: imprisonment 6 months-2 years + fine Rs 10,000-20,000. Late payment attracts simple interest at govt-notified rate.

Citations

• SourcePayment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) — Sections 4, 4Alabour.gov.in