Gratuity

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Gratuity

Meaning:

Gratuity is defined as a lump-sum financial benefit paid by an employer to an employee as a reward for long-term service. It is provided when an employee leaves the job after completing at least 5 years of continuous service, but this rule does not apply in cases of death or disability. In simpler terms, gratuity is a “thank you” payment for loyal service.

Example:

For instance, if an employee has worked for a company for 8 years and decides to leave, they will be entitled to receive gratuity as a reward for their service.

How to understand Gratuity :

Gratuity provides financial security to employees after retirement or resignation.

It helps create trust and stability between employers and employees.

Importance of Gratuity :

Gratuity acts as a long-term savings fund and ensures employees have a safety net during job changes.

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Gratuity

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