Welcome to SGCMS, your trusted partner for specialized services related to The Payment of Gratuity Act, 1972. Our comprehensive solutions are designed to guide your organization through the intricacies of this important legislation, ensuring fair gratuity practices, compliance, and employee well-being.
The Payment of Gratuity Act, 1972 serves as a retirement benefit, as it disburses the accumulated amount to employees after their retirement. In a specific case, the Supreme Court of India referenced the Gratuity Act, affirming that employees are eligible to claim retirement benefits after a specified duration of service with a particular company. The Indian Parliament enacted the Payment of Gratuity Act, 1972 on August 21, 1972.
As per the decision of the Supreme Court of India, the payment of gratuity to the Employee is mandatory, once the Employee has served the establishment for at least 5 (Five) Years. An Employee becomes eligible to claim his Gratuity under the Gratuity Act when he leaves the Establishment. The reason for leaving may be resignation or retirement or can even be due to any medical condition caused by diseases of accidents and death.
Exception to the Rule: the criteria of completing the service of 5 years is not mandatory if, the cause of the termination of employment is (i) death of the Employee or; (ii) any disability due to diseases or accidents, making the Employee incapable of continuing the Services.
Section 4(2) of the Gratuity Act, 1972 provides for a fixed formula to calculate the amount of Gratuity to be paid. However, under Section 4 (3) of the Gratuity Act, the maximum amount of Gratuity to be paid by the Establishment is fixed at Rs. 10,00,000/-.
Formula For Calculating Gratuity:
{(Basic salary + D.A) x 15 days x No. of years of service} / 26
Being India's leading HR and Payroll service provider, we at SGC Management Pvt. Ltd. provide the best service and assistance along with a dedicated expert Consultant, who will ensure that you that all the compliances are made in accordance with the Payment of Gratuity Act, 1972.
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The Payment of Gratuity Act Related FAQs
The Payment of Gratuity Act mandates that employees receive a gratuity payment upon retirement, resignation, or death. Compliance ensures employees' financial security and well-being post-employment.
SGCMS offers expert consultation, accurate gratuity calculation, documentation support, and employee communication services to ensure accurate and fair gratuity distributions.
Gratuity calculation involves a formula based on the employee's tenure of service and last drawn salary. Our services assist in accurate gratuity calculation based on the statutory formula.
Employees who have completed a minimum period of service (usually five years) are eligible to receive gratuity. We help identify eligible employees and calculate their gratuity entitlement.