{"id":230375,"date":"2026-10-06T15:05:25","date_gmt":"2026-10-06T09:35:25","guid":{"rendered":"https:\/\/www.oliveboard.in\/blog\/?p=230375"},"modified":"2026-10-06T15:05:27","modified_gmt":"2026-10-06T09:35:27","slug":"payment-of-gratuity-act-1972","status":"publish","type":"post","link":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/","title":{"rendered":"Payment of Gratuity Act 1972 Objectives, and Recent Updates"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_77 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#What_are_the_objectives_of_the_Payment_of_Gratuity_Act_1972\" >What are the objectives of the Payment of Gratuity Act, 1972?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#Download_EPFO_APFC_Payment_of_Gratuity_Act_1972_Quiz_PDF\" >Download EPFO APFC Payment of Gratuity Act, 1972 Quiz PDF<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#Attempt_UPSC_EPFO_APFC_Payment_of_Gratuity_Act_1972_Quiz\" >Attempt UPSC EPFO APFC Payment of Gratuity Act, 1972 Quiz<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#Sign_Up\" >Sign Up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#Login\" >Login<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#Forgot_Password\" >Forgot Password<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#i\" >&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#Who_was_covered_under_the_Payment_of_Gratuity_Act\" >Who was covered under the Payment of Gratuity Act?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#When_is_an_employee_eligible_for_gratuity\" >When is an employee eligible for gratuity?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#How_is_gratuity_calculated\" >How is gratuity calculated?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#What_are_the_recent_updates_related_to_gratuity\" >What are the recent updates related to gratuity?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>The Payment of Gratuity Act, 1972 is an important social security law that provides a lump-sum benefit to eligible employees for their service. It was introduced to provide financial support to employees at the time of retirement, resignation, superannuation, death, or disablement. For UPSC EPFO and other labour law exams, understanding its objectives, coverage, eligibility, calculation, and recent changes under the Code on Social Security, 2020 is important.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-objectives-of-the-payment-of-gratuity-act-1972\"><span class=\"ez-toc-section\" id=\"What_are_the_objectives_of_the_Payment_of_Gratuity_Act_1972\"><\/span>What are the objectives of the Payment of Gratuity Act, 1972?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The main objective of the Act is to provide financial security to employees after they complete a specified period of service. Gratuity acts as a reward for long and continuous service and provides support when employment comes to an end. The Act also provides rules for eligibility, calculation, nomination, payment, and forfeiture of gratuity. The key objectives include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Providing social security to employees.<\/li>\n\n\n\n<li>Rewarding long and continuous service.<\/li>\n\n\n\n<li>Providing financial support after retirement or resignation.<\/li>\n\n\n\n<li>Supporting employees or their families in cases of death or disablement.<\/li>\n\n\n\n<li>Ensuring timely payment of gratuity.<\/li>\n\n\n\n<li>Providing a legal framework for gratuity-related disputes.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-prep-kit\/?ref=contac-upsc-epfo-epf-pgratuity-act-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Check Out UPSC EPFO Prep Kit<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-download-epfo-apfc-payment-of-gratuity-act-1972-quiz-pdf\"><span class=\"ez-toc-section\" id=\"Download_EPFO_APFC_Payment_of_Gratuity_Act_1972_Quiz_PDF\"><\/span>Download EPFO APFC Payment of Gratuity Act, 1972 Quiz PDF<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The UPSC EPFO APFC Payment of Gratuity Act, 1972 Quiz PDF is useful for revising important concepts related to gratuity eligibility, continuous service, calculation of gratuity, coverage of establishments, five-year service requirement, nomination, forfeiture, and recent changes under the Code on Social Security, 2020.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Particulars<\/strong><\/td><td><strong>Link<\/strong><\/td><\/tr><tr><td>Payment of Gratuity Act, 1972 Quiz<\/td><td><a href=\"https:\/\/www.oliveboard.in\/upsc-epfo-prep-kit\/?ref=contac-upsc-epfo-epf-pgratuity-act-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now<\/a><\/td><\/tr><tr><td>UPSC EPFO APFC Previous Year Papers<\/td><td><a href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-previous-year-question-papers\/?ref=contac-upsc-epfo-epf-pgratuity-act-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now<\/a><\/td><\/tr><tr><td>UPSC EPFO APFC Labour Laws Practice Notes PDF<\/td><td><a href=\"https:\/\/www.oliveboard.in\/labour-laws-and-industrial-relations\/?ref=contac-upsc-epfo-epf-pgratuity-act-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Check Details<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Attempt_UPSC_EPFO_APFC_Payment_of_Gratuity_Act_1972_Quiz\"><\/span>Attempt UPSC EPFO APFC Payment of Gratuity Act, 1972 Quiz<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Test your preparation with the UPSC EPFO APFC Payment of Gratuity Act, 1972 Quiz and revise important concepts such as gratuity eligibility, continuous service, the five-year rule, gratuity calculation, coverage of establishments, nomination, forfeiture, and recent updates under the Code on Social Security, 2020.<\/p>\n\n\n\n<!DOCTYPE html>\n<html lang=\"en\">\n<head>\n<meta charset=\"UTF-8\">\n<link rel=\"stylesheet\" href=\"https:\/\/courses.oliveboard.in\/edge\/css\/login-modal-for-blog.css\">\n\n<style>\n#quiz-1-sticky-header {\n  position: sticky;\n  top: 0;\n  z-index: 100;\n  background: #1565c0;\n  color: #fff;\n  padding: 12px 20px;\n  border-radius: 10px 10px 0 0;\n  display: flex;\n  justify-content: space-between;\n  align-items: center;\n  font-size: 16px;\n  font-weight: bold;\n  box-shadow: 0 2px 8px rgba(0,0,0,0.2);\n  margin: -20px -20px 20px -20px;\n}\n\n#quiz-1-score-badge {\n  background: rgba(255,255,255,0.2);\n  padding: 4px 12px;\n  border-radius: 20px;\n  font-size: 15px;\n  white-space: nowrap;\n}\n#quiz-1 * { box-sizing: border-box; }\n\n#quiz-1 .quiz-container {\n  max-width: 700px;\n  margin: auto;\n  padding: 20px;\n  background: #fff;\n  border-radius: 14px;\n  box-shadow: 0 6px 16px rgba(0,0,0,0.12);\n}\n\n#quiz-1 h2 {\n  text-align: center;\n}\n\n#quiz-1 .question {\n  margin-bottom: 22px;\n}\n\n#quiz-1 .question p {\n  font-weight: bold;\n}\n\n#quiz-1 button {\n  width: 100%;\n  padding: 12px;\n  margin: 6px 0;\n  border: none;\n  border-radius: 6px;\n  background: #e0e0e0;\n  color: #000;\n  font-size: 16px;\n  cursor: pointer;\n}\n\n#quiz-1 button:hover {\n  background: #d5d5d5;\n}\n\n#quiz-1 button.correct {\n  background: #4caf50;\n  color: #000;\n}\n\n#quiz-1 button.wrong {\n  background: #f44336;\n  color: #000;\n}\n\n#quiz-1 button.locked {\n  pointer-events: none;\n}\n\n\/* SUMMARY *\/\n#quiz-1 .final-summary {\n  margin-top: 40px;\n  padding: 20px;\n  border-radius: 14px;\n  background: #fafafa;\n  border: 2px solid #4caf50;\n}\n\n#quiz-1 .final-summary h3 {\n  text-align: center;\n  margin-bottom: 20px;\n}\n\n#quiz-1 .summary-row {\n  display: grid;\n  grid-template-columns: 120px 1fr 40px;\n  gap: 10px;\n  align-items: center;\n  margin-bottom: 12px;\n  font-weight: bold;\n}\n\n#quiz-1 .summary-bar {\n  height: 14px;\n  background: #ddd;\n  border-radius: 10px;\n  overflow: hidden;\n}\n\n#quiz-1 .bar-fill {\n  height: 100%;\n  width: 0%;\n}\n\n#quiz-1 .bar-attempted { background: #2196f3; }\n#quiz-1 .bar-correct { background: #4caf50; }\n#quiz-1 .bar-wrong { background: #f44336; }\n#quiz-1 .bar-unattempted { background: #9e9e9e; width: 100%; }\n\n#quiz-1 .final-score {\n  text-align: center;\n  font-size: 22px;\n  margin-top: 20px;\n}\n\n#quiz-1 .score-value {\n  font-size: 30px;\n  margin-left: 8px;\n}\n<\/style>\n<\/head>\n\n<body>\n<div id=\"quiz-1\">\n  <div class=\"quiz-container\">\n<div id=\"quiz-1-sticky-header\">\n  <span> UPSC EPFO APFC Payment of Gratuity Act, 1972 Quiz <\/span>\n  <span id=\"quiz-1-score-badge\">Score: <strong id=\"quiz-1-score-value\">0.00<\/strong><\/span>\n<\/div>\n\n    <!-- QUESTIONS -->\n\n<div class=\"question\" data-answered=\"false\">\n  <p>1. What was the primary objective of the Payment of Gratuity Act, 1972?<\/p>\n  <button data-correct=\"false\">To regulate industrial disputes and strikes<\/button>\n  <button data-correct=\"false\">To regulate minimum wages in all employments<\/button>\n  <button data-correct=\"false\">To provide unemployment insurance to all citizens<\/button>\n  <button data-correct=\"true\">To provide a statutory scheme for payment of gratuity to eligible employees<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>2. The Payment of Gratuity Act, 1972 was enacted as which Act number?<\/p>\n  <button data-correct=\"false\">Act No. 21 of 1972<\/button>\n  <button data-correct=\"true\">Act No. 39 of 1972<\/button>\n  <button data-correct=\"false\">Act No. 36 of 1972<\/button>\n  <button data-correct=\"false\">Act No. 45 of 1972<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>3. On which date was the Payment of Gratuity Act, 1972 enacted?<\/p>\n  <button data-correct=\"false\">28 September 2020<\/button>\n  <button data-correct=\"true\">21 August 1972<\/button>\n  <button data-correct=\"false\">29 March 2018<\/button>\n  <button data-correct=\"false\">16 September 1972<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>4. The Payment of Gratuity Act, 1972 originally came into force on:<\/p>\n  <button data-correct=\"true\">16 September 1972<\/button>\n  <button data-correct=\"false\">21 August 1972<\/button>\n  <button data-correct=\"false\">1 January 1973<\/button>\n  <button data-correct=\"false\">29 March 2018<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>5. Under the 1972 Act, which of the following establishments was covered irrespective of the ten-person threshold applicable to shops and establishments?<\/p>\n  <button data-correct=\"false\">A self-employed professional working alone<\/button>\n  <button data-correct=\"false\">A small unnotified consultancy with 4 employees<\/button>\n  <button data-correct=\"true\">A factory<\/button>\n  <button data-correct=\"false\">A household employing domestic help<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>6. For a shop or establishment, the general employee threshold for coverage under the gratuity law is:<\/p>\n  <button data-correct=\"false\">5 or more persons for at least 5 years<\/button>\n  <button data-correct=\"false\">50 or more persons on the date of claim<\/button>\n  <button data-correct=\"true\">10 or more persons employed, or employed on any day of the preceding 12 months<\/button>\n  <button data-correct=\"false\">20 or more persons continuously for 12 months<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>7. Once a shop or establishment becomes covered by the gratuity law, what happens if its workforce later falls below ten?<\/p>\n  <button data-correct=\"false\">Coverage ends unless the employer voluntarily opts in<\/button>\n  <button data-correct=\"false\">Coverage continues only for six months<\/button>\n  <button data-correct=\"false\">Coverage automatically ends immediately<\/button>\n  <button data-correct=\"true\">It continues to remain covered<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>8. Under the Payment of Gratuity Act, 1972, an apprentice was generally:<\/p>\n  <button data-correct=\"false\">Included only if paid above a wage ceiling<\/button>\n  <button data-correct=\"false\">Treated as a seasonal employee<\/button>\n  <button data-correct=\"true\">Excluded from the definition of employee<\/button>\n  <button data-correct=\"false\">Automatically treated as a fixed-term employee<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>9. Under the 1972 Act, eligibility for gratuity was generally subject to what wage ceiling?<\/p>\n  <button data-correct=\"true\">No wage ceiling for employee eligibility<\/button>\n  <button data-correct=\"false\">Rs. 10,000 per month<\/button>\n  <button data-correct=\"false\">Rs. 21,000 per month<\/button>\n  <button data-correct=\"false\">Rs. 15,000 per month<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>10. Under the traditional rule, gratuity becomes payable on retirement or resignation after continuous service of at least:<\/p>\n  <button data-correct=\"false\">10 years<\/button>\n  <button data-correct=\"false\">1 year<\/button>\n  <button data-correct=\"false\">3 years<\/button>\n  <button data-correct=\"true\">5 years<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>11. Under the gratuity law, completion of five years of continuous service is not required when termination is due to:<\/p>\n  <button data-correct=\"true\">Death or disablement due to accident or disease<\/button>\n  <button data-correct=\"false\">Ordinary leave without termination<\/button>\n  <button data-correct=\"false\">Transfer to another department<\/button>\n  <button data-correct=\"false\">Voluntary resignation only<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>12. For a monthly-rated employee, the standard gratuity formula uses:<\/p>\n  <button data-correct=\"true\">Last drawn monthly wages x 15\/26 x eligible years of service<\/button>\n  <button data-correct=\"false\">Last drawn monthly wages x 7\/30 x service<\/button>\n  <button data-correct=\"false\">Basic pay x 12\/30 x service<\/button>\n  <button data-correct=\"false\">Average annual wages x 30\/365 x service<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>13. For gratuity calculation, a part of a year is counted as an additional completed year when it is:<\/p>\n  <button data-correct=\"false\">Exactly six months or more<\/button>\n  <button data-correct=\"true\">In excess of six months<\/button>\n  <button data-correct=\"false\">Exactly three months or more<\/button>\n  <button data-correct=\"false\">Any period exceeding one month<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>14. An employee has completed 8 years and exactly 6 months of service. Under the standard completed-year rule, how many years are counted?<\/p>\n  <button data-correct=\"false\">9 years<\/button>\n  <button data-correct=\"true\">8 years<\/button>\n  <button data-correct=\"false\">8.5 years<\/button>\n  <button data-correct=\"false\">10 years<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>15. An employee has completed 8 years and 7 months of service. Under the standard completed-year rule, how many years are counted?<\/p>\n  <button data-correct=\"true\">9 years<\/button>\n  <button data-correct=\"false\">10 years<\/button>\n  <button data-correct=\"false\">8.5 years<\/button>\n  <button data-correct=\"false\">8 years<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>16. For a piece-rated employee, daily wages for gratuity are generally based on:<\/p>\n  <button data-correct=\"false\">Minimum wage notified for the industry<\/button>\n  <button data-correct=\"false\">Average wages for the preceding 12 months including overtime<\/button>\n  <button data-correct=\"true\">Average wages received during the 3 months immediately preceding termination, excluding overtime wages<\/button>\n  <button data-correct=\"false\">Highest single day wage in the preceding year<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>17. For an employee in a seasonal establishment who is not employed throughout the year, gratuity is generally payable at:<\/p>\n  <button data-correct=\"true\">7 days wages for each season<\/button>\n  <button data-correct=\"false\">10 days wages for each completed year<\/button>\n  <button data-correct=\"false\">30 days wages for each season<\/button>\n  <button data-correct=\"false\">15 days wages for each month<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>18. Which section of the Payment of Gratuity Act, 1972 dealt with payment of gratuity?<\/p>\n  <button data-correct=\"false\">Section 2A<\/button>\n  <button data-correct=\"false\">Section 6<\/button>\n  <button data-correct=\"false\">Section 13<\/button>\n  <button data-correct=\"true\">Section 4<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>19. Which section of the Payment of Gratuity Act, 1972 dealt with nomination?<\/p>\n  <button data-correct=\"false\">Section 14<\/button>\n  <button data-correct=\"false\">Section 8<\/button>\n  <button data-correct=\"true\">Section 6<\/button>\n  <button data-correct=\"false\">Section 3<\/button>\n<\/div>\n\n<div class=\"question\" data-answered=\"false\">\n  <p>20. Which section of the Payment of Gratuity Act, 1972 protected gratuity from attachment in execution of court orders?<\/p>\n  <button data-correct=\"false\">Section 15<\/button>\n  <button data-correct=\"true\">Section 13<\/button>\n  <button data-correct=\"false\">Section 7<\/button>\n  <button data-correct=\"false\">Section 4A<\/button>\n<\/div>\n\n    <!-- FINAL SUMMARY -->\n    <div class=\"final-summary\">\n      <h3>Quiz Summary <\/h3>\n\n      <div class=\"summary-row\">\n        <span>Attempted<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-attempted\" data-summary=\"attempted\"><\/div><\/div>\n        <span data-count=\"attempted\">0<\/span>\n      <\/div>\n\n      <div class=\"summary-row\">\n        <span>Correct<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-correct\" data-summary=\"correct\"><\/div><\/div>\n        <span data-count=\"correct\">0<\/span>\n      <\/div>\n\n      <div class=\"summary-row\">\n        <span>Wrong<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-wrong\" data-summary=\"wrong\"><\/div><\/div>\n        <span data-count=\"wrong\">0<\/span>\n      <\/div>\n\n      <div class=\"summary-row\">\n        <span>Unattempted<\/span>\n        <div class=\"summary-bar\"><div class=\"bar-fill bar-unattempted\" data-summary=\"unattempted\"><\/div><\/div>\n        <span data-count=\"unattempted\">0<\/span>\n      <\/div>\n\n      <div class=\"final-score\">\n        Final Score: <span class=\"score-value\" data-score>0.0<\/span>\n      <\/div>\n    <\/div>\n\n  <\/div>\n<\/div>\n<div class=\"modal modal-obls\" id=\"modal-signup\">\n        <div class=\"modal-background\"><\/div>\n        <div class=\"modal-content\">\n           <div class=\"obls-group\" id=\"obls-group1\">\n               <div class=\"obls-blk\">\n                   <span class=\"img-box\"><img decoding=\"async\" src=\"\/img\/img-delivery.svg\" alt=\"\"><\/span>\n                   <h2 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Generally, shops and establishments employing <strong>10 or more persons<\/strong> were covered.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Particulars<\/strong><\/td><td><strong>Details<\/strong><\/td><\/tr><tr><td>Factories<\/td><td>Covered<\/td><\/tr><tr><td>Mines<\/td><td>Covered<\/td><\/tr><tr><td>Oilfields<\/td><td>Covered<\/td><\/tr><tr><td>Plantations<\/td><td>Covered<\/td><\/tr><tr><td>Ports<\/td><td>Covered<\/td><\/tr><tr><td>Railway companies<\/td><td>Covered<\/td><\/tr><tr><td>Shops and establishments<\/td><td>Generally, 10 or more employees<\/td><\/tr><tr><td>Main purpose<\/td><td>Payment of gratuity as a social security benefit<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-when-is-an-employee-eligible-for-gratuity\"><span class=\"ez-toc-section\" id=\"When_is_an_employee_eligible_for_gratuity\"><\/span>When is an employee eligible for gratuity?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under the general rule, an employee becomes eligible for gratuity after completing five years of continuous service when employment ends due to retirement, superannuation, or resignation. However, the five-year condition is not required in cases such as death or disablement. The current framework also provides a special gratuity provision for fixed-term employees.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>General qualifying service: 5 years<\/li>\n\n\n\n<li>Death: Five-year condition is not required.<\/li>\n\n\n\n<li>Disablement: Five-year condition is not required.<\/li>\n\n\n\n<li>Fixed-term employees: Eligible for gratuity after one year of service under the contract, subject to the Code&#8217;s conditions.<\/li>\n\n\n\n<li>Working journalists have a special three-year service provision.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-apfc\/?ref=contac-upsc-epfo-epf-pgratuity-act-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Enroll  for UPSC EPFO APFC Online Courses<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-is-gratuity-calculated\"><span class=\"ez-toc-section\" id=\"How_is_gratuity_calculated\"><\/span>How is gratuity calculated?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The traditional gratuity formula for a monthly-rated employee is based on 15 days&#8217; wages for every completed year of service. The commonly used formula is Last drawn wages \u00d7 15\/26 \u00d7 completed years of service. The treatment of wages has become particularly important after the implementation of the Code on Social Security, 2020.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Formula:<\/strong> Gratuity = Last drawn wages \u00d7 15\/26 \u00d7 completed years of service\n<ul class=\"wp-block-list\">\n<li>For example, if the last drawn wages are \u20b950,000 and the employee has completed 10 years of service:<\/li>\n\n\n\n<li>\u20b950,000 \u00d7 15\/26 \u00d7 10 = approximately \u20b92.88 lakh<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/upsc-epfo-apfc-study-plan\/?ref=contac-upsc-epfo-epf-pgratuity-act-pq\" target=\"_blank\" rel=\"noreferrer noopener\">Check out the UPSC EPFO Study Plan<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-recent-updates-related-to-gratuity\"><span class=\"ez-toc-section\" id=\"What_are_the_recent_updates_related_to_gratuity\"><\/span>What are the recent updates related to gratuity?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A major update came with the implementation of the Code on Social Security, 2020. The four Labour Codes, including the Code on Social Security, were made effective from 21 November 2025. The gratuity provisions are now covered under the new social security framework.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Earlier provision<\/strong><\/td><td><strong>Recent update<\/strong><\/td><\/tr><tr><td>Payment of Gratuity Act, 1972<\/td><td>Gratuity provisions are now covered under the Code on Social Security, 2020<\/td><\/tr><tr><td>General service requirement of 5 years<\/td><td>Five years remains the general rule, with specific exceptions<\/td><\/tr><tr><td>Fixed-term employees<\/td><td>Gratuity can be payable after one year of service under the contract<\/td><\/tr><tr><td>Wage calculation<\/td><td>Wage definition under Section 2(88) of the Code applies<\/td><\/tr><tr><td>New gratuity calculation<\/td><td>Applicable from 21 November 2025<\/td><\/tr><tr><td>Wage components<\/td><td>Payments outside the components covered by Section 2(88) are not considered for gratuity calculation<\/td><\/tr><tr><td>Contract labour<\/td><td>Contractor is responsible for gratuity after the prescribed continuous service<\/td><\/tr><tr><td>FTE clarification<\/td><td>Fixed-term employment refers to employees directly engaged by the employer<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The Ministry of Labour and Employment has clarified that the new gratuity calculation applies prospectively from 21 November 2025. It has also clarified that fixed-term employment refers to employees directly engaged by the employer and does not include contract labour engaged through contractors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faqs\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1791278395783\"><strong class=\"schema-faq-question\">1. What is the Payment of Gratuity Act, 1972?<\/strong> <p class=\"schema-faq-answer\">The Payment of Gratuity Act, 1972 provides a statutory social security benefit to eligible employees for their service.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1791278396530\"><strong class=\"schema-faq-question\">2. What is the main objective of the Payment of Gratuity Act?<\/strong> <p class=\"schema-faq-answer\">Its main objective is to provide financial security to employees after retirement, resignation, death, or disablement.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1791278397353\"><strong class=\"schema-faq-question\">3. How many years of service are generally required for gratuity?<\/strong> <p class=\"schema-faq-answer\">An employee generally needs five years of continuous service to qualify for gratuity, subject to specific exceptions.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1791278397860\"><strong class=\"schema-faq-question\">4. Is five years of service required in case of death or disablement?<\/strong> <p class=\"schema-faq-answer\">No, the five-year service requirement does not apply in cases of death or disablement.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1791278398353\"><strong class=\"schema-faq-question\">5. What is the rate of gratuity for each completed year of service?<\/strong> <p class=\"schema-faq-answer\">Gratuity is generally calculated at the rate of 15 days&#8217; wages for every completed year of service.<\/p> <\/div> <\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n<ul class=\"wp-block-latest-posts__list is-grid columns-3 wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-apfc-indian-economy-conceptual-numerical-quiz\/\">Attempt UPSC EPFO APFC Indian Economy Conceptual &amp; Numerical Quiz<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-apfc-computer-applications-quiz\/\">Attempt UPSC EPFO APFC Computer Applications Quiz &amp; Download PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/code-on-social-security-2020-practice-quiz\/\">UPSC EPFO APFC Code on Social Security 2020 Quiz &amp; Free PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-apfc-insurance-quiz\/\">Attempt UPSC EPFO APFC Insurance Practice Quiz &amp; Download PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-apfc-auditing-practice-quiz\/\">Attempt UPSC EPFO APFC Auditing Practice Quiz &amp; Download PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/upsc-epfo-apfc-marks-vs-cut-off\/\">UPSC EPFO APFC Marks vs Cut-Off, How to Calculate Your Score?<\/a><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>The Payment of Gratuity Act, 1972 is an important social security law that provides a lump-sum benefit to eligible employees<\/p>\n","protected":false},"author":58,"featured_media":253417,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10321],"tags":[],"class_list":["post-230375","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-epfo","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Payment of Gratuity Act 1972 Objectives, and Recent Updates<\/title>\n<meta name=\"description\" content=\"Understand the Payment of Gratuity Act 1972 and how it offers financial support to employees for long and continuous service.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Payment of Gratuity Act 1972 Objectives, and Recent Updates\" \/>\n<meta property=\"og:description\" content=\"The Payment of Gratuity Act, 1972 is an important social security law that provides a lump-sum benefit to eligible employees for their service. 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What is the Payment of Gratuity Act, 1972?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The Payment of Gratuity Act, 1972 provides a statutory social security benefit to eligible employees for their service.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278396530","position":2,"url":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278396530","name":"2. What is the main objective of the Payment of Gratuity Act?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Its main objective is to provide financial security to employees after retirement, resignation, death, or disablement.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278397353","position":3,"url":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278397353","name":"3. How many years of service are generally required for gratuity?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"An employee generally needs five years of continuous service to qualify for gratuity, subject to specific exceptions.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278397860","position":4,"url":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278397860","name":"4. Is five years of service required in case of death or disablement?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"No, the five-year service requirement does not apply in cases of death or disablement.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278398353","position":5,"url":"https:\/\/www.oliveboard.in\/blog\/payment-of-gratuity-act-1972\/#faq-question-1791278398353","name":"5. 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