Understanding the Gratuity Application Process: How Can Employees Ensure a Smooth Payout?

Process for the Application of Gratuity for an Employee

The process for applying for gratuity for an employee typically involves the following steps:

1. **Eligibility Check:** Ensure the employee meets the criteria for gratuity as per company policies and relevant labor laws.

2. **Application Submission:** The employee needs to submit a formal request for gratuity to the HR department or relevant authority.

3. **Documentation:** The employee may be required to provide necessary documents such as proof of employment duration, salary details, and other relevant information.

4. **Processing:** The HR department will review the application, verify the details, and calculate the gratuity amount owed to the employee.

5. **Approval:** Once the application is processed, approved, and verified, the gratuity amount will be disbursed to the employee.

It is important for both employees and employers to understand the gratuity application process to ensure a smooth and timely payout for eligible employees.

Gratuity:
It is given to a person for long and meritorious service in any industry. Gratuity is payable even to an employee who resigns after completing at least 5 years of service.

Applicability:
Every factory, mine, oil field, plantation, port, railways, company, shop establishment, or educational institution employing ten or more persons.

Main Provisions

Gratuity Eligibility Criteria:
Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years. Thus, for an employee to become entitled to the payment of gratuity, he must have rendered continuous service of at least 5 years. The completion of continuous service of 5 years is not necessary where the termination of the employment of an employee is due to his death or disablement.

Wages for Calculation:
Gratuity is calculated at the rate of 15 days' wages for every completed year as if the month comprises 26 days at the last drawn wages.

Monthly Salary x 15 days x No. of yrs. of service / 26

Employee: All employees irrespective of status or salary.

Qualifying Period: On rendering of 5 years of service either on termination or on resignation or retirement.

Entitlement: On completion of 5 years of service except in the case of death or disablement.

Maximum Ceiling: Rs.3,50,000/-

When Gratuity is Not Paid:

- On termination of an employee for disorderly behavior.
- Wholly or partly for willfully causing loss or destruction of property, etc.

Penalties:

- Imprisonment for six months or a fine up to Rs.10,000 for avoiding payment by making false statements or representations.
- Imprisonment not less than 3 months and up to one year with a fine on default in complying with the provisions of the Act or rules.

For more reference, check the link below:
1. Payment Of Gratuity Act 1972

An employee has to apply for gratuity in Form I. The amount is supposed to be paid to him before 30 days of his leaving service.

Let me also make a correction to the post by Amrita, that the maximum gratuity is not 3.5 Lakhs but it is Rs. 10 lakhs now.

Regards,
Madhu.T.K

I would like to know the format for applying for my gratuity. I worked for 5 years in the company. How do I apply for it? Can anybody please help me by providing the format?

Thank you,

Dinesh

Please find the form I have attached. Kindly remember that you cannot apply for gratuity simply because you have completed five years of service with a company. Gratuity becomes due only when you leave the company after a minimum of five years of service.

Regards,
Madhu.T.K