Who all are eligible to get gratuity?

#1

Who all are eligible to get gratuity? Do all companies pay gratuity?

#2

Any employee who completes more than five years of full time service with a company or organization is entitled for gratuity. So if you are a constant job hopper then you may not get any gratuity from your employer. Gratuity is that part of your salary that the employer services as a gratitude for your service to the company.

The payment of gratuity is governed as per section 10(10) of the income tax act. Yes every company or organization with more than 10 employees must pay gratuity to each of its employees as per the payment of gratuity Act. Companies can pay gratuity money out of their own fund or purchase a group gratuity plan from any life insurance service provider. The maximum sum of money paid under gratuity cannot exceed Rs. 10 Lakhs.

#3

Hi Nisha,

Naturally, gratuity becomes payable only after you have spent a certain number of years with the company because it is benefit meant for loyal employees. You will receive this benefit either at the time of retirement or when you resign from employment. There are two conditions that must be satisfied in order to be eligible to get the gratuity benefit

  1. Your organization has a minimum of 10 people on payroll, i.e., at least 10 employees receiving salaries from the organization. Note that people on contract are not considered.
  2. You have completed at least 5 years with the organization.

Cheers,
BB Expert