Gratuity Payment Dilemma: Can Small Companies Pay Directly Without Insurance?

Ours is a small company with 18 employees but not registered under any insurance scheme for gratuity. One of our employees has resigned, and as per law, is eligible for gratuity. Can the company pay directly to such an employee, or is it a must to be registered under any of the insurance companies for payment of gratuity is my query. Appreciate your answers.

Dear friend,

It is a statutory obligation on the part of every employer to have compulsory insurance under Section 4-A of the Payment of Gratuity Act, 1972, in respect of gratuity payable to their employees. For complete details, please refer to thread 3565 entitled Group Gratuity Scheme.

In the absence of an insurance scheme, you should pay the gratuity directly to the employees upon their termination of employment.