Gratuity is a kind of retirement fund for an employee to be paid by a company to an employee.
Gratuity provisions are administrated by Gratuity Act, 1972.
When a company need to pay gratuity to an employee?
A company need to pay gratuity to an employee while he leaves company after providing services for 5 or more years.
Whether company has to take any registration for payment of gratuity?
There is no registration requirement. There is no registration prescribed for payment under gratuity act, 1972. However payment becomes automatically payable due to provisions of act.
What is the requirement of gratuity payment and do all companies have to pay gratuity to employee?
- It is applicable only if number of employees is more than 10.
- Employee should have provided service for 5 years or more.
- Gratuity can be paid only when employee terminates his services or due to death.
- You can also form a trust with LIC or any other financial institute and deposit provisional amount in the trust.