Labour & HR
Gratuity — Meaning
A lump sum paid on leaving after five years' service (one year for fixed-term staff), tax-free up to ₹20 lakh.
What is Gratuity?
Gratuity is paid by employers under the Code on Social Security, 2020, at 15 days' wages for each completed year of service (wages × 15 × years ÷ 26). Employees qualify after five years of continuous service, fixed-term employees after one year, and there is no service condition on death or disablement. For private-sector employees, gratuity is tax-free up to ₹20 lakh over a lifetime; government employees' gratuity is fully exempt.
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Related terms
More Labour & HR terms
Labour Codes
Four codes that replaced 29 labour laws from 21 November 2025 — wages, industrial relations, social security and OSH.
ESIC (Employees' State Insurance)
Health and social insurance for employees earning up to ₹21,000 a month in establishments with 10+ employees.
POSH Act
The law requiring employers with 10+ employees to have an Internal Committee on sexual harassment complaints.
