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When is the Gratuity Payable?
What is a Gratuity ?– the definition of it is: a benefit plan given by the employer to the employee. For rendering five years of service, continuously or more. It is usually given at the time of retirement, and it’s a monetary benefit. Although to receive this benefit there are certain rules. Thus to make an employee eligible, for receiving gratuity before the age of retirement or superannuation. Therefore payment of Gratuity Act, 1972, came into existence. Then the question arises When Is Gratuity Payable?
Thus, according to the Payment of Gratuity Act, 1972, an employee is only eligible to receive gratuity:
- When an employee has rendered a five years continuous service with an organisation.
- This gratuity is payable to the employee on his retirement from the work or the superannuation.
However, there is an exception which states that the condition of five years continuous service isn’t applicable. If, termination of an employee’s services happens. Due to any of the reasons- his death or has got any disability due to an accident or a disease. Then the employer is liable to pay gratuity to him, legal heir, or the nominee, under the law. In this situation number of continuous service done by the employee doesn’t count.
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