Payment of Gratuity Act 1972 is an Indian law that makes companies pay a one-time gratuity to retired employees or an employee who resigns after a minimum of 5 years of service. The law applies to all companies of at least 20 employees.
The amount of gratuity is calculated as follows:
15 days’ wages for each completed year of service, subject to a maximum of Rs. 20 lakh.
In the case of seasonal establishment, gratuity is payable at the rate of seven days wages for each season.
The gratuity is payable to the employee or, in the event of the employee’s death, to the employee’s legal heirs.
The employer is required to pay the gratuity within 30 days of the employee’s retirement or resignation. If the employer fails to pay the gratuity within the stipulated time, the employee is entitled to interest at the rate of 12% per annum from the date on which the gratuity was due.
The Payment of Gratuity Act, 1972 is a social security measure that provides financial assistance to employees who have retired or resigned after a long period of service. The Act helps to ensure that employees have a safety net in their old age or in the event of their death.
Here are some of the benefits of the Payment of Gratuity Act, 1972:
It provides financial assistance to employees who have retired or resigned after a long period of service.
It helps to ensure that employees have a safety net in their old age or in the event of their death.
It reduces the financial burden on the government’s social security schemes.
It promotes industrial peace and harmony.
The Payment of Gratuity Act, 1972 is an important piece of legislation that has a positive impact on the lives of millions of employees in India