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Central regulation

Payment of Gratuity

Establishments with 10+ employees must pay gratuity (15 days of wages for every completed year) on superannuation, resignation (after 5 years) or death/disablement. Maximum gratuity is Rs 20 lakh.

Check this for your businessThe Compliance module

Information, not legal advice. Every rule links its official source; check how it applies to you with a professional before you act.

Definition

Establishments with 10+ employees must pay gratuity (15 days of wages for every completed year) on superannuation, resignation (after 5 years) or death/disablement. Maximum gratuity is Rs 20 lakh.

  • SourcePayment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) · Sections 4, 4A
    labour.gov.in

What it means in practice

Payment of Gratuity is administered by Ministry of Labour & Employment. The obligation is grounded in Payment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) (Sections 4, 4A).

Compulsory insurance via LIC or recognised insurer under Sec 4A — relevant for new establishments. Fixed-term employees now get pro-rata gratuity without 5-year requirement.

  • SourcePayment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) · Sections 4, 4A
    labour.gov.in

Triggers (applicability conditions)

Compliance radar in LuckPanda checks these conditions against a business profile to decide whether this rule applies.

  • employee_count>=10

Deadlines and penalty

Cadence
Ongoing · Continuous
Next due
No fixed date Ongoing duty
Penalty for default
Non-payment: imprisonment 6 months-2 years + fine Rs 10,000-20,000. Late payment attracts simple interest at govt-notified rate.

This obligation has no fixed calendar date: it depends on when you start, your licence date or your registration.

Citations

  • SourcePayment of Gratuity Act, 1972 (subsumed under Social Security Code 2020) · Sections 4, 4A
    labour.gov.in

Payment of Gratuity by state