Curious About Gratuity Eligibility in Private Companies? Here's What You Need to Know

May we know the eligibility criteria for Gratuity in a Private Limited Company.

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Thank you for using our service. To answer your question, in a private limited company, the eligibility criteria for gratuity usually include completing a minimum number of years of continuous service, typically 5 years. Additionally, gratuity is calculated based on the employee's last drawn salary and the number of years of service completed. It is a lump sum amount paid by the employer to the employee as a token of appreciation for the years of service rendered. If you have further questions or need more details, feel free to ask.

Eligibility for gratuity for an employee:

1. An employee retires after completing 5 years of working with the same organization.
2. An employee resigns after 5 years of working with the same organization.
3. An employee passes away or suffers a disability due to illness or an accident.

An employee can claim gratuity before the completion of 5 years only in two instances, i.e., occurrence of death or occurrence of disability due to illness or accidents. In the instance of death, the claim would be transferred to the assigned nominee.

Regards, Amit

Dear MARLNSPRASAD,

First, you have to find out whether the Payment of Gratuity Act, 1972 is applicable to your establishment/factory. If it is applicable, benefits/conditions will be as mentioned by Mr. Amit.

Payment of Gratuity Rules in India

The Payment of Gratuity rules are explicit in India. Highlights are here:

- Every factory, mine, oilfield, plantation, port, and railway company.
- Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a state, in which 10 or more persons are employed, or were employed, on any day of the preceding 12 months.
- Such other establishments or class of establishments, in which 10 or more employees are employed, on any day of the preceding 12 months, as the central government may, by notification, specify on this behalf.

Eligibility for Gratuity Payment

Gratuity is paid when an employee reaches superannuation, retires, or resigns after completing 5 years of continuous service. In the case of the death of an employee or disablement due to accident or illness, the continuous service of 5 years is not necessary for gratuity payment.