The Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972
This infographic is for informational purposes only and does not constitute legal advice.
Maximum Payable Gratuity
The Act specifies a maximum limit on the gratuity amount payable by an employer.
₹20 Lakhs
Who is Covered by the Act?
The Act’s protections extend to employees across a wide range of industries and establishments.
🏭
Factories, Mines & Plantations
⚓
Ports & Railway Companies
🏬
Shops & Establishments
(with 10+ employees)
🏢
Other Notified Establishments
(with 10+ employees)
The Path to Gratuity Eligibility
Eligibility depends on your length of service and the reason for leaving your job. See the process below.
Employment Ends
Gratuity process is initiated.
Did the employee complete 5 years of continuous service?
YES
NO (See Exceptions)
Eligible if Termination is due to:
- ✔ Superannuation
- ✔ Retirement
- ✔ Resignation
5-Year Rule is Waived if Termination is due to:
- ✔ Death of Employee
- ✔ Disablement
Breaking Down the Calculation
The gratuity amount is based on 15 days of wages for each completed year of service.
The Formula
(Last Salary / 26) x 15 x Years of Service
When can Gratuity be Lost?
Employers can forfeit gratuity payments in cases of serious employee misconduct.
Key Procedures & Authorities
Nomination: Securing Your Funds
- 1. After one year of service, you must nominate a beneficiary.
- 2. Nominees should ideally be family members.
- 3. A non-family nomination becomes void if you later acquire a family.
- 4. Nominations can be updated at any time with a new form.
Disputes: The Controlling Authority
Grievance is filed with the authority
Authority investigates and determines the amount
Issues a binding order for payment
Orders can be appealed to a higher authority
