Gratuity Applicability for Organisations with less than 10 Employees

Hi,

Our company had 10 workers 5 years back. After that we have done a manpower cut and now we only have 8 workers. Is the Org. eligible for gratuity today? Usually, gratuity is not applicable for Org. with less than 10 workers, is this the same here?

Thanks.

4 Likes

Hi @Swati,

New gratuity payment rules are likely to suggest that “an employee will be eligible for gratuity payments only after he or she has rendered continuous service for not less than five years — on his superannuation, or on his retirement or resignation; or on his death or disablement due to accident or disease”

3 Likes

Hi Swati,

The Payment of Gratuity Act would have first become applicable to your organisation 5 years back when the Company had 10 or more persons employed, following which, the Act will continue to be applicable even if the number of persons falls below 10 subsequently.

Even if you have just 8 workers today, Gratuity will be applicable.

3 Likes

Hi Swati,

Our fellow members have already shared the information here. Just adding- Once enrolled into an Act this establishment has to continue the benefits under given circumstances. There are ways in which a business gets closed so the payments are made as per the rules, but for Gratuity / Bonus etc., once enrolled needs to be followed, irrespective the employee count.

thanks.

1 Like

Hi @Swati

Yes! Once the employer enrols into some social benefits, it’s not that easy to close the same under any circustances.

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