Organisation with 5 employees - whether Gratuity has to be paid to an employee who is being asked to leave? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
HCMM
Business

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We have a company of 5 employees and I'd like to know whether Gratuity has to be paid to an employee who is being asked to leave, keeping the number in mind.
Thank you.

If the total no of employees in an establishment is 10 or above on any day at present or was so in the past, the Payment of Gratuity Act,1972 would be applicable to that establishment. Therefore, it is not necessary to pay the exiting employee statutory gratuity. But, since the exit seems to be at the instance of the employer, he should be paid retrenchment compensation@ 15 days average wages for every completed year of service along with one month's notice pay, if no notice is given.
The expectation from the employee was for both RC and Gratuity, so thank you so much for clearing this up.
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