Is gratuity mandatory in India? Even if not mentioned in Offer Letter

Sir, I am currently working private limited company. One employee recently resigned & have 8 years of experience. We didn’t mention gratuity benefits anywhere (Offer letter, payslip). Now he is requesting the gratuity.
The Company have to pay ?

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To adhere the statutory compliance of gratuity act, you are supposed to pay him gratuity amount. Else, you will face the heat if the employee knocks labour department

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Hi @prabufidens

In 1972 the Government passed the Payment of Gratuity Act and made it mandatory for all the employers with more than 10 employees to pay gratuity.

Payment of Bonus Act and Payment of Gratuity Act: Know your essentials.

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Hi Prabu,

Your description " Private Limited Co " refers to its constitution but fails to indicate what kind of establishment it is such as factory, mine, plantation or shop or establishment.

The Payment of Gratuity Act,1972 applies to every factory, mine, oil field, plantation, port and railway company without any restriction to its no. of employees, to every shop or establishment within the meaning of any law for the time being in force which employs currently or in the past not less than 10 employees and to every other such establishments specially notified by the Central Government in this regard.

Therefore, if your establishment falls within any one of the above category, you are statutorily bound to pay gratuity to every exiting employee with not less than 5 years of continuous service in your company within 30 days of his termination of employment. Otherwise, you will have to pay simple interest @ 10% p.a for every day’s delay.

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