Gratuity refers to a monetary token of appreciation provided by an employer to an employee for their dedicated service throughout their tenure.
Traditionally, gratuity is granted upon retirement, although certain circumstances may warrant its disbursement earlier.
To be eligible for gratuity, an individual typically needs to have completed a minimum of five years of service with the organization. However, exceptions apply in cases of unfortunate events such as an employee’s demise or incapacitation due to an accident or illness, where gratuity may be provided regardless of the duration of service.
FAQ
Gratuity calculation typically involves a formula based on the employee's tenure of service and last drawn salary. The exact formula may vary depending on local regulations or company policies. It's usually calculated as a certain number of days' wages multiplied by the number of years served.
Eligibility for gratuity often depends on the duration of employment. In many jurisdictions, employees become eligible for gratuity after completing a minimum period of continuous service, such as five years. However, this criterion can differ from country to country and may also be influenced by company policies.
In some cases, gratuity may be forfeited if an employee is terminated for misconduct or if they resign without providing the required notice period as per company policy. However, this also varies based on local regulations and company policies.
Gratuity may be subject to taxation depending on the laws of the country where it's paid. In many jurisdictions, there are tax exemptions or concessions available up to a certain limit based on factors such as the length of service. It's advisable to consult with tax professionals or relevant authorities for accurate information.
While gratuity is traditionally paid as a lump sum upon the termination of employment, some companies may offer the option to pay it periodically, subject to local regulations and company policies. However, this is less common and typically requires specific arrangements to be made in advance.
Unlock Your Potential!
Fast Forward Your Digital HR Transformation Journey
Step into the future today, where you can elevate, enhance, and expertly manage your people and processes.
Guides
Comprehensive HCM suite
customised to your needs

Embrace the future with StoHRM's automated, intuitive, & flexible HR suite.