“Gratuity”

What is Gratuity?

Gratuity is a bonus or additional payment, typically given to employees as a reward or recognition for their long-term service and commitment to a company or organization. It is seen in many forms including benefits, monetary rewards, performance bonuses or time-off in lieu of pay. Gratuity is usually awarded to full-time employees after extended years, but part-time and even some temporary employees may also be eligible for some form of gratuity.

Gratuity is often calculated based on a number of variables including the employee’s length of service, job role, or position in the organization, and their salary. It is seen by many as an incentive to stay in the organization or industry and promote a sense of job satisfaction and work loyalty.

Importance of Gratuity?

Gratuity is an important benefit for both employers and employees. For employers, gratuity is a tool to boost employee morale and performance. It
encourages employees to stay with the organization and motivates them to take on extra work or tasks. It is also a way to show appreciation to loyal employees. From the employee’s perspective, gratuity can be a financial cushion to help them have a comfortable standard of living and provide additional security.

FAQs

Can part-time employees receive gratuity?

Yes, part-time employees may be eligible for gratuity as long as they meet the eligibility criteria outlined by the organization or their contract. However, the terms and conditions may differ from that of full-time employees.

How is gratuity different from a provident fund?

A gratuity is an additional amount of money given to employees for their continued service to an organization. A provident fund is a pension fund established by an employer or organization to provide additional savings and retirement benefits to its employees.

What happens if an employer doesn’t pay gratuity?

If an employer fails to pay gratuity, the organization is liable for the payment under the Payment of Gratuity Act 1972. An employee may file a complaint with labor commissions or tribunals for payment of gratuity, interest, and compensation.

Also See: Net Pay | Reward and recognition policy