Gratuity is a token of appreciation, a way of showing gratitude for an employee's long-term commitment. In India, it is governed by the Payment of Gratuity Act of 1972. This legislation specifies when an employee is entitled to gratuity , how it is calculated, and the responsibility of employers to ensure timely disbursement. What is gratuity ? Gratuity is a significant financial benefit that employees receive from their employers as a gesture of appreciation for their long-term service. Traditionally seen as a retirement benefit, gratuity has now taken on a more structured and inclusive role with the introduction of the Code on Social Security, 2020. These new gratuity rules aim to expand the scope of coverage, improve clarity, and ensure that all categories of workers—whether permanent, fixed-term, or even gig workers—receive ... Learn how to calculate gratuity in India with formulas, examples, timelines, tax rules, and a free HR calculator. A 2025 guide for new HR professionals. Gratuity in India : Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for their long-term service. Governed by the Payment of Gratuity Act , 1972, it applies to employees in both the private and public sectors who meet certain eligibility criteria.
