![]() However, allowances like bonus, commission, HRA, overtime or other allowances are not to be considered for calculations. Wages shall consist of basic plus dearness allowance (DA), as per last drawn salary. In the last year of service, if the employee has completed more than 6 months, it will be treated as full year for the purpose of gratuity. Gratuity is payable 15 days wages for every year of completed service. In case of death and disablement, the condition of minimum 5 years’ service is not applicable. Normally, gratuity is payable only after an employee completes 5 years of continuous service. Gratuity is payable to a person on (a) resignation (b) termination on account of death or disablement due to accident or disease (c) retirement (d) death. Gratuity is reward for good, efficient and faithful service rendered for a considerable period. However, under Gratuity Act, gratuity is payable even to an employee who resigns after completing at least 5 years of service. It is basically a retirement benefit to an employee, so she / he can live life comfortably after retirement. ![]() ![]() As per Payment of Gratuity Act, 1972, gratuity is a lump sum payment to employee when she / he retires or leaves service.
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