Gratuity
/ɡrəˈtjuːɪti/
Labour Law Term
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Definition
A statutory lump sum payable by an employer to an employee as a reward for long service, paid on retirement, resignation, death, or disablement. Governed by the Payment of Gratuity Act, 1972. Minimum 5 years of continuous service required (waived for death or disablement). Formula: 15 days' wages (last drawn) per year of service. Maximum: Rs. 20 lakh (revised 2018).
Etymology
Legal term with origins in Latin, Anglo-French, or Old English legal tradition, later codified in Indian law.
Examples
Case Study
In Birla Institute of Technology v. State of Jharkhand (2019), the Supreme Court held that teachers in private educational institutions are entitled to gratuity under the Payment of Gratuity Act — a significant expansion of the Act's coverage.
Key Cases
Birla Institute of Technology v. State of Jharkhand
2019(2019) 4 SCC 513
Extended Payment of Gratuity Act coverage to teachers in private educational institutions with 10 or more employees. Significant expansion of gratuity rights in the education sector.
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