Gratuity, in the context of labor laws, is a statutory benefit provided to employees as a form of appreciation for their service to the organization. It's a lump sum payment made by the employer to the employee upon fulfillment of certain conditions, typically upon retirement, resignation, or termination, after completing a certain period of continuous service.
The regulations concerning gratuity vary from one country to another. In many jurisdictions, including India, the United States, and the United Kingdom, there are specific laws and regulations that govern gratuity payments.
For instance, in India, the Payment of Gratuity Act, 1972, mandates that gratuity be paid to employees who have worked continuously for at least five years in an organization with 10 or more employees. The amount of gratuity payable is based on a formula that takes into account the employee's last drawn salary and the number of years of service.
In the United States, gratuity is not mandated by federal law, but some states may have their own regulations regarding gratuity or tips in certain industries, such as hospitality.
Employers need to ensure compliance with relevant labour laws regarding gratuity to avoid legal issues and to uphold the rights of their employees.
