An Introduction on The Payment of Gratuity Act, 1972 :

Gratuity is a word derived from a Latin word ‘Gratuitas’ which simply means a ‘Gift.’ In the industrial sector, it can be treated as a gift from the employer to his employee for the services rendered to his establishment by him for the development and prosperity of the same. Gratuity is a benefit, which an employee gets at the time of retirement or when he leaves the establishment. Gratuity is a amount (as a lump sum payment) which is paid by an employer to his employee for his past services when the employment comes to an end due to the retirement or superannuation of the workers. Thus, this gratuity scheme serves as an instrument of social security as well as a reward to a person who sacrifices his whole life in the betterment, development and prosperity of an establishment, and in other way for the Nation. Today the payment of gratuity have become a statutory obligation of employers and a statutory right of the employees to claim through the way of an enactment, the Payment of Gratuity Act,1972. The Act provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and for matters connected with or incidental to them.