Briefly stated, "Gratuity" is a statutory-one time-lump sum terminal benefit available to all employees irrespective of their status or salary on termination of employment including death while in service after rendering a minimum qualifying service of not less than 5 years of continuous service in an establishment which is a factory,mine, oil field,plantation, port and railway company irrespective of the total no of employees or which is a shop or establishment employing or having employed 10 or more no of employees or any other establishment with 10 or more no of employees on roll if so notified by the Central Govt under the Payment of Gratuity Act,1972. However, the termination due to employee's death while in service does not require the minimum qualifying service.
"Retrenchment Compensation", on the contrary, is a terminal benefit payable to an employee who falls within the definition of the term "workman" u/s 2(s) of the Industrial Disputes Act,1947 as per section 25F of the Act when his services are terminated by the employer for whatever reason other than dismissal on disciplinary grounds, attaining the age of superannuation as mentioned in the contract of employment, non-renewal of the contract of employment on its expiry or termination due to continued ill health of the employee.
Therefore, a managerial cadre employee is eligible to gratuity on his normal termination whereas he is not entitled to retrenchment compensation when his services are terminated by his employer.
However, if a notice clause of a certain duration pertaining to unilateral termination is fixed in the contract of employment of such an employee and the employer resorts to terminate the employee immediately, then the employee should be paid salary in lieu of notice for the said period.
14th May 2019 From India, Salem