Payment of Gratuity: [Section 4(1)]

Gratuity shall be payable to an ‘employee’ on the termination of his employment after he has rendered continuous service for not less than five years –

♦ On his superannuation, or

♦ On his retirement or resignation, or

♦ On his death or disablement due to accident or disease;

The condition of the completion of five years continuous service is not essential in case of the termination of the employment of any employee due to death or disablement. Generally, it is payable to the employee himself. However, in case of death of the employee it shall be paid to his nominee or if no nomination has been made, to his heirs.

The payability of Gratuity to the employee is his right as well as the obligation of the employer.

It is a statutory right given to the employees [Balbir kaur v.SAIL(2000)6 SCC493]. It becomes payable to an employee on the date of termination of his employment.[Rashtriya Mill Mazdoor Sangh v. NTC(1996)1 SCC 313].

By the change of ownership, the relationship of employer and employees subsists and the new employer cannot escape from the liability of payment of gratuity to the employees; it was held in the case of Pattathurila K. Damodaran Vs M.Kassim Kanju (1993) I LLJ 1211 (Ker).

An employee resigning from service is also entitled to gratuity; (Texmaco Ltd. Vs Sri Ram Dhan 1992 LLR 369(Del) and non-acceptance of the resignation is no hurdle in the way of an employee to claim gratuity; (Mettur Spinning Mills Vs Deputy Commissioner of Labour, (1983) II LLJ 188).

For the purpose of this Section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.