The Payment of Gratuity Act, 1972 provides for the payment of gratuity to employees working in factories, shops, establishments, and educational institutions employing 10 or more persons on any day during the preceding 12 months.
Once the Act becomes applicable to any shop or establishment, it continues to remain applicable even if the number of employees falls below 10 at any later stage.
All employees, irrespective of their designation or salary, are eligible for gratuity after completing 5 years of continuous service. However, in cases of death or permanent disablement, the minimum service requirement of 5 years is not applicable.
Gratuity is payable at the rate of 15 days’ wages based on the employee’s last drawn salary for every completed year of service. The maximum gratuity amount payable shall be as prescribed under the Act from time to time.
We provide complete consultancy and compliance services under the Payment of Gratuity Act, 1972, including documentation, calculations, employee guidance, and statutory compliance support.
Gratuity=[(Basic Salary+D.A.)×15×Years of Service]/26
