Gratuity to be paid on termination of employment only after 5 years of service

The gratuity amount will be calculated at the rate of 15 days wages for every completed year of service.

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Gratuity to be paid on termination of employment only after 5 years of service

As per the Code on Social Security 2019, employees will become eligible for payment of gratuity only after their employment is terminated after completing five years of continuous service.

Therefore, the employee can hope to receive gratuity payment after five years of service, on superannuation, or retirement or resignation, or in case of death or disablement due to accident or diseases, or if the contract period is terminated under fixed-term employment or on the occurrence of any such event notified by the Central Government.

However, there are situations where the completion of five years of service is not compulsory. That is, in case the employment is terminated due to the death or disablement of employee, or expiration of fixed-term employment. In case of the employee’s death, the gratuity amount will be paid to the employee’s nominee. In the absence of any such nomination, the amount will be paid to the heirs of the concerned employee.

The gratuity payment will be made at the rate of 15 days wages for every completed year of service. For employees who receive monthly wages/salary, the 15 days wages will be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

For daily-wage employees, the daily wages will be calculated on the average of the total wages received by the employee for three months immediately preceding the termination of employment. The wages paid for overtime work will not be taken into account.

However, the Bill is first to be approved by both Houses of the Parliament.

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