Gratuity Fund Confusion: Is It Mandatory and When Should It Begin?

Hello Team Members,

Is keeping Gratuity fund mandatory for any organization, and if yes, when does it start? As the Act has not simplified, the employer is required to keep the fund as mandatory, and also no such period has been mentioned in the act. Please share your views.

Dear Member,

Keeping a Gratuity fund is not mandatory for any organization under the Payment of Gratuity Act, 1972.

R N KHOLA

Section 4A makes it mandatory for every employer to invest in the gratuity provision to LIC's gratuity scheme every year. However, this section applies to establishments in the state from the date on which the State Government will notify. Some state governments, like Kerala, have notified dates on which section 4A will be applicable to establishments in such states. If your state has also notified the applicability of this section, then you have to invest the fund in LIC.