As per the gratuity payment rules, gratuity payment can be done upon an employee’s retirement, death, resignation, termination of employment, disablement following a disease or an accident, lay-off because of retrenchment, or if the employee opts for VRS.However, this gratuity payment rule is not applicable in case of an employee’s death or disablement. An employee should complete 5 complete years of service within the organization to be eligible for gratuity payment.However, in case the number of employees falls below 10, then also it will have to give gratuity payment as per the Gratuity Act. The first gratuity payment rule is that an organization can make gratuity payment only if it has 10 or more than 10 employees in the preceding 12 months.Some of these gratuity payment rules include the following: There are some gratuity payment rules which should be followed by the employers. GRATUITY CALCULATION ONLINE Important Gratuity Payment Rules & Regulations

The take-home pay of the employees will get reduced but the deductions under social security schemes like provident fund will rise.

Many experts are of the belief that the implementation of the new labour law will bring about a big change in the salary structure. An increase in the basic pay of an employee will automatically lead to a higher gratuity payment to the employee.Īccording to the new definition, bonus, pension contributions, provident fund contributions, house rent allowance, conveyance allowance, gratuity and overtime should not be included in the salary. In such situations where the basic pay of the employee is below 50%, the employers may need to restructure the employee’s salary structure to abide by the new rules under the four labour codes. Organizations will have to pay a minimum of 50% of the salary of the employees as basic pay. According to experts, organizations will have to bring about changes in their cost to the company (CTC) as well as allowances after the implementation of the new labour law. The new labour law is to be implemented from April 1 st 2021. The new gratuity payment rules 2022 have been finalized by the Ministry of Labour and Employment under the Four Labour Code. Moreover, this law applies to only those organizations which have a minimum of 10 employees.

20 lakhs do not have to pay any tax on the amount received by him as part of gratuity. Also, an employee receiving gratuity payments up to Rs. Here, salary is the sum of basic wages and dearness allowance. As part of gratuity, for an employee’s every year of service, the organization will have to pay an amount which is equivalent to 15 days of his salary which he has last drawn. However, an employee becomes eligible for gratuity payments only after the completion of 5 years within the organization.Īccording to the Payment of Gratuity Act, 1972, an employee is entitled to receive 15 days of salary as gratuity in every year of his service. Among the various components which are included in an employee’s gross salary, gratuity is one of them.

Gratuity is given by an employer to an employee as a token of thanks for rendering his service to the company. Gratuity can be defined as an amount of money that an employee receives from his employer as per the Payment of Gratuity Act 1972.

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