This article discusses the concept of gratuity as a key social security benefit under the Code on Social Security, 2020, explaining when gratuity becomes payable, how it is calculated, and the rights and obligations of both employees and employers.
Here’s what you need to know:
‣ Eligibility for Gratuity – Payable after 5 years of continuous service on retirement, resignation, death, disablement, or completion of a fixed-term contract.
‣ Computation of Gratuity – Calculated at 15 days’ wages for every completed year of service, with revised wage definitions affecting the payout amount.
‣ Pro-Rata Benefit for Fixed-Term Employees – Even without completing 5 years, fixed-term employees are entitled to gratuity proportionate to their service period.
‣ Compulsory Gratuity Insurance – Employers must obtain insurance coverage or maintain an approved gratuity fund to meet gratuity liabilities.
‣ Timely Payment Requirement – Employers must determine and pay gratuity within 30 days.
