Gratuity is governed by Payment of Gratuity Act. Payment of Gratuity Act calls for payment of gratuity @ 15 days salary (Basic + DA) per year of service to an employee who leaves employment after at least 5 years of service. In case the gratuity is due on account of death of the employee, 5 years service is not required. Gratuity is paid at the rate of salary at the time of employee leaving the establishment. Any fraction of year exceeding six months shall be taken as one year for determining the period of service. As such one who has served for 8 years and 7 months will be eligible for 9 years gratuity.
No amount should be deducted from the salary of the employee to find fund for payment of gratuity. It is sole responsibility of the employer.
Regards,
Madhu.TK