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Who is gratuity applicable for in India?

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The Payment of Gratuity Act, 1971, applies to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments for at least five full years with ten or more employees. Years of service does not matter in the event that an employee passes away or is rendered disabled due to accident or illness, in which case gratuity must be paid to the employee's nominee. Gratuity is fully paid by the employer and no part comes from an employee's salary.
Gratuity is paid when an employee:

  • Reaches the time of superannuation (retiring at the age of 58);
  • Retires at any other age;
  • Resigns; or
  • Passes away or is rendered disabled due to accident or illness.


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