- Employer: In the context of the Act, an employer refers to any person, body, authority, company, or firm that employs 10 or more employees in an establishment covered under the Act. The employer is responsible for the payment of gratuity to eligible employees as per the provisions of the Act.
- Employee: An employee under the Act includes any person (other than an apprentice) who is employed for wages, whether directly or indirectly, in any establishment, factory, mine, oilfield, plantation, port, railway company, shop, or other establishment covered under the Act. Both permanent and temporary employees are eligible for gratuity if they meet the eligibility criteria.
- Continuous Service: Continuous service refers to the uninterrupted period of service rendered by an employee with the same employer. According to the Act, an employee is considered to be in continuous service if they have worked for the same employer for a period of at least 240 days in the preceding 12 months. In the case of seasonal establishments, continuous service may be determined based on the actual number of days worked during the season.
- Gratuity: Gratuity is a statutory payment made by the employer to the employee in recognition of the employee’s long and meritorious service to the organization. It is a lump sum payment given to the employee upon retirement, resignation, death, or disablement due to accident or illness. The gratuity amount is calculated based on the employee’s length of continuous service and the last drawn salary.
- Nominee: A nominee is a person designated by the employee to receive the gratuity amount in the event of the employee’s death. The employee can nominate one or more persons as nominees, and if there are multiple nominees, the gratuity amount is distributed among them according to the proportions specified in the nomination.
Understanding these key terms is essential for both employers and employees to ensure compliance with the provisions of the Payment of Gratuity Act, 1972, and to facilitate the payment of gratuity in accordance with the statutory requirements