If you’ve worked at a company for several years and are now planning to leave, one important thing you shouldn’t miss is your gratuity.
While most people are aware of salary and provident fund, gratuity often gets ignored or misunderstood—either because employers don’t bring it up or because employees don’t know they’re entitled to it.
Gratuity is a one-time payment made by your employer to appreciate your long-term service. It’s governed by the Payment of Gratuity Act, 1972, which applies to establishments with ten or more employees.
You become eligible once you complete five or more years of continuous service with the same company. Even if you’re resigning, retiring, or being laid off, as long as you meet this basic criterion, you have a legal right to receive gratuity.
Now, gratuity isn’t something you’re automatically paid. You need to request it through a specific process. The good news is that it’s not complicated, and most of it is paperwork.
Before we dive into the steps, here’s a quick look at how gratuity is calculated and who qualifies:
| Eligibility | Explanation |
|---|---|
| Minimum Service | 5+ years of continuous employment with the same employer (except in cases of death or disablement) |
| Applicability | Company must have had 10 or more employees at any time in the past 12 months |
| Type of Exit | Resignation, retirement, layoff, or death |
| Legal Coverage | Payment of Gratuity Act, 1972 |
Gratuity is not a part of your CTC unless explicitly stated. It is a statutory benefit, not a performance-based incentive. This means an employer is legally required to pay it if you qualify—regardless of whether you bring it up or not.
Unfortunately, some employers don’t mention it clearly in the appointment letter. That’s why it’s important to understand what your employment contract actually says.
If you’re unsure what should be in your contract, read this guide on What Is a Legal Employment Contract and What It Should Contain.
There’s also a growing trend of deductions and delays in employee entitlements like PF and gratuity. Many employees don’t even realise when their PF isn’t being deposited properly.
You might also find this blog helpful: How to Check If Your Employer Is Legally Deducting PF.
Even if your company hasn’t brought it up, you should feel confident in asking for your gratuity—because the law is on your side.
To formally claim gratuity, you need to apply to your employer using Form I under the Payment of Gratuity Act, 1972. You can submit this form either in person or by registered post within 30 days from the date of leaving the job. Some companies also accept scanned forms via email. You can download Form I here.
Once your employer receives Form I, they’re legally required to verify your eligibility and calculate the amount payable. Within 15 days, they must issue you a formal notice of gratuity payable (Form L).
The actual payment should be made within 30 days from receiving your application.
If they fail to pay within this period, interest applies automatically as per Section 8 of the Act, and you can raise the issue before the Controlling Authority in your area. Every state has designated officers for this—usually under the Labour Department. You can find state-wise contacts on this list.
The only exceptions where gratuity can be withheld are outlined in Section 4(6). If you’ve caused intentional damage, engaged in violence, or were terminated for serious misconduct involving moral turpitude, then the employer may withhold the full or partial amount.
But this must be supported with proper inquiry and written reasons.
In the real world, delays are often due to miscommunication, incomplete paperwork, or employers simply hoping the employee won’t follow up. Stay firm, polite, and keep everything documented—especially your exit communication.
If there’s no response after 30 days, file a complaint with your district’s Labour Commissioner.
And remember, if you’ve served more than five continuous years, gratuity is not a favour—it is your legal right.
If you’re planning to leave your job soon, this guide on How to Resign Legally – Notice Period, Clearance, and Final Pay will help you stay on the right side of HR and the law.
FAQs
1. Can I claim gratuity if I resign and not retire?
Yes, resignation after 5 years of service qualifies you for gratuity.
2. Is gratuity taxed in India?
Gratuity up to ₹20 lakhs is tax-free for private-sector employees if covered under the Act.
3. Can a contract override gratuity rights?
No. Gratuity is a statutory benefit and cannot be waived through contract terms.
4. What if my company shut down before paying gratuity?
You can still claim it from the company’s legal representative or file with the Labour Commissioner.
5. Do I need a lawyer to claim gratuity?
Not usually. The process is administrative. Legal help is only needed for serious disputes.
