INTRODUCTION On Payment of Gratuity Act, 1972 :

Gratuity is a lump sum payment made by the employer as a mark of recognition of the service rendered by the employee when he retires or leaves service. The Payment of Gratuity Act provides for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.

The Payment of Gratuity Act has been amended from time to time to bring it in tune with the prevailing situation. Recently the Act has been amended twice to enhance the ceiling on amount of gratuity from Rs.3.50 lakh to Rs.10 lakh as well as to widen the scope of the definition of “employee” under section 2 (e) of the Act. These amendments have been introduced by the Payment of Gratuity (Amendment) Act, 2010 with effect from May 24, 2010.