Yes, that is correct. It is mandatory for every employer in India to pay an employee gratuity if the employee has been with the company for at least five continuous years.
Is gratuity mandatory in India
As per the government rules It is mandatory for employers to pay a gratuity amount to the employee. the gratuity amount should be payable to the employee within 30 days. and if the employee failed or daily to pay the gratuity amount to the employee within 30 days then employers have to pay simple interest on the gratuity amount from the due date until the payment is made. check this The Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972, makes it mandatory for certain employers in India to pay gratuity to their employees who have completed five or more years of continuous service with the company. In this context, it is important to understand the provisions of the act and the obligations of employers with regard to gratuity payments. This article will explore the question “Is gratuity compulsory in India?” and provide an overview of the regulations governing gratuity payments in India.
How to calculate gratuity in India
Gratuity is a form of monetary benefit provided to employees by their employer as a token of appreciation for the services rendered to the organization. It serves as a financial security for employees during their retirement, resignation or termination. In India, gratuity is governed by the Payment of Gratuity Act, 1972 and is applicable to all organizations that have more than 10 employees. The calculation of gratuity amount is based on various factors such as the employee’s tenure of service, last drawn salary, and the formula specified under the Act. you can read complete information here how to calculate gratuity in india