Hi, Is it mandatory for an employer to give Gratuity? Thanks Avinash
From India, Bangalore
Dear Mr. Avinash,
As per Payment of Gratuity Act,1972, every employee who has completed 5 years of his continuous service is illegible to claim gratuity. In case of death of employee who has completed at least one year of service, his/her heirs are illegible to claim gratuity amount. Every employer who runs factory under Factory Act, Shop/Establishment under shop & establishment Act, has to pay Gratuity to his/her employees. In any other establishment engaging at least 10 employees employer has to pay gratuity.

From India, Lucknow
Gratuity is mandatory in Kenya whereby an employee is entitled to not less than 15 days pay for each completed year of service. Essy
From Kenya, Nyeri
Dear Avinash,

The Payment of Gratuity Act 1972:- Gratuity is a voluntary Payment made by the employer to the employee in recognition of continuous, meritorious services and sincere efforts by the employee towards the organization.It is governed under the Payment of Gratuity Act 1972.It is an Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, Oilfields, plantations, ports, railway companies, and shops or other establishments


As per the Gratuity Act, the scheme for the payment of gratuity is available to:

Employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental with.

Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

Such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

Employee :-The term “employee” is defined in Section 2(e) of the Act as any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;’.

Gratuity Entitlement :-Gratuity is payable to an employee (nominee – in case of death of employee) who has rendered continuous service of five years or more on his termination of employment, superannuation, retirement or resignation. Completion of continuous service of five years is not necessary where the termination of employment is due to death or disablement due to accident or disease

Nomination:-In case of death, the gratuity is payable to any of the following persons:


Heirs (in absence of nomination)

In case nominee/ heir is a minor, such amount will be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority

Maximum Limit :-The Gratuity limit as per Section 4(3) has been raised from 3.5 lakhs to 10 lakhs. This will give advantage to both private and public sector employees. According to this new amendment, the maximum gratuity exemption as per IT Act also increases to Rs. 10,00,000

◦It can be formulated as follows: Basic + DA (Wages Last drawn)* 15days/26 * number of years of continuous service (six months or less to be ignored and more than six months to be counted as full year)

Do let us know incase any other details required

From India, Bangalore
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