The Payment of Gratuity Act provides for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.
The Act enforces the payment of gratuity, a reward for long service, as a statutory retiral benefit.
Applicability
The Payment of Gratuity Act extends to the whole of India and is applicable to all factories, mines, oilfields, plantations, ports, railway companies and any establishments where 10 or more persons were employed on any day of the preceding 12 months and every Shop and Establishment of that State, in which 10 or more persons are employed, or were employed on any day in the preceding 12 months.
Every employee irrespective of his wages is entitled to receive gratuity if he has rendered continuous service of 5 years or more than 5 years.
The Act is not applicable to apprentices and persons holding a post under the Central or State government who are governed by any other rule providing for payment of gratuity.
The last drawn salary including Basic and Dearness allowance(DA). The maximum gratuity payable is Rs 20,00,000.