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Gratuity is a defined benefit plan and is a lump sum payment made to the employee based on the duration of total service. This benefit is payable on separation from employment on account of resignation, death, or retirement by taking the last drawn salary as the base for computing purpose. In case of death of the employee, the surviving family members are given the amount.

In India, the Payment of Gratuity Act, 1972 is the act that governs Gratuity and this applies to factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies, shops, or other establishments.



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