Question

Write notes on gratuity.

Answer 1

Gratuity is a lump sum amount paid by an employer to an employee as a token of appreciation for their long and continuous service. It is a form of retirement benefit, governed by the Payment of Gratuity Act, 1972. An employee becomes eligible for gratuity after completing a minimum of five years of continuous service with the same employer. The amount is usually paid at the time of retirement, resignation, death, or disablement due to accident or illness. Gratuity is calculated based on the last drawn salary and the number of years of service. It provides financial security to employees and their families after employment ends and is considered a significant part of the employee’s post-service benefits.