Section: HR & People · CompensationDifficulty: Medium
Gratuity
USUK
A statutory lump sum paid to employees upon completing five years of service.
Definition
Gratuity is a statutory retirement benefit payable under the Payment of Gratuity Act, 1972 in India to employees who have completed at least five years of continuous service with an organization. The amount is calculated as 15 days of last drawn salary for each completed year of service. It is a recognition of the employee's loyalty and long-term contribution to the organization.
Example
“After completing 10 years with the company, Ramesh received a gratuity of ₹2.5 lakhs calculated on his last drawn basic salary of ₹50,000.”
Synonyms
- service gratuity
- long service award
- terminal benefit
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