Gratuity under Social Security Code

The Social Security Code has fixed different thresholds with respect to eligibility for gratuity of permanent and fixed-term employees
Gratuity shall be payable to eligible employees by every shop or establishment in which ten (10) or more employees are employed, or were employed, on any day of the preceding twelve (12) months
Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five (5) years, on his superannuation; on his retirement or resignation; on his death or disablement due to accident or disease; on termination of his contract period under fixed-term employment. However, continuous service of five (5) years shall not be necessary where the termination of the employment of any employee is due to the expiration of fixed-term employment
For every completed year of service or part thereof in excess of six (6) months, the employer shall pay gratuity to an employee at the rate of fifteen (15) days’ wages. The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government. Gratuity under the SS Code is payable to employees hired directly or through a contractor

Penalty under social security code for default under the provisions of payment of Gratuity

If any person fails to pay any amount of gratuity to which an employee is entitled to, he shall be punishable with imprisonment for a term which may extend to one (1) year or with a fine which may extend to Rupees Fifty Thousand (Rs. 50,000/-), or with both.

Mr. Shivam Jha
(Industrial Relation Advisor and professional- HR Ignite)

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