Are you eligible to receive gratuity payment from your employer? Find out

A less talked yet important part of your salary is gratuity – a sum that you receive when employment ends. It is a form of acknowledgement given to an employee for the services that he has rendered. This benefit is payable under the Payment of Gratuity Act, 1972. Even though the amount has to be paid at the end of employment, some companies have different rules that allow you to claim this money beforehand. However, the person should have completed at least five years of service in an organisation.

The other cases when you can receive the amount include if an employee becomes disabled or passes away. The amount can be paid to the employee or his or her nominee, regardless of the number of years of continuous service.

But, how do you know if you are eligible to receive the money? There are certain criteria that have to be fulfilled. 

- The employee has to be eligible for superannuation

- The employee should have retired

- The employee must have resigned after completing 5 years with the same employer

- The employee dies or suffers with a disability caused due to an illness or accident

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When to apply for Gratuity?

The Payment of Gratuity Act, 1972 states that you can apply within a matter of 30 days from the date it becomes payable. If the date of superannuation or retirement is known, the application can be made before 30 days. However, the rules specify that your claims cannot be regarded invalid, simply because the application was not filed in the specific period. 

What is Payment of Gratuity Act, 1972?

Passed in 1972, the act covered employees that were engaged in factories, mines, oil fields, plantations, ports, companies and establishments with over ten employees. The act states that the gratuity amount due is to be paid wholly by the employer and does not require contribution by the employee.