Understanding Gratuity Act: Which Establishments Are Covered and What Are the Criteria?

Hi HRs,

Can you please tell me on which establishments the gratuity act will be applicable, and what are its criteria for implementation?

Thanks & Regards

Any establishment, shops, or factory that have employed 10 or more persons in the preceding twelve months are covered under the Payment of Gratuity Act. After the applicability of the gratuity act, if the workforce falls below 10, it will still be applicable.

Once the establishment is covered, it will remain so in the future as well.

Calculation of gratuity: Total wages (basic + DA) / 26 days x 15 x number of completed years of service.

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