Gratuity is payable whether or not an application is made — the obligation to determine and pay it sits with the employer once it becomes payable. An application starts the clock formally and creates a record, and an employer who waits for one before doing anything has misunderstood the obligation.
Application for Payment of Gratuity
By an employee, nominee or legal heir
Gratuity is payable whether or not an application is made — the obligation to determine and pay it sits with the employer once it becomes payable. An application starts the clock formally and creates a record, and an employer who waits for one before doing anything has misunderstood the obligation.
To the Employer
[COMPANY NAME] [ADDRESS OF THE ESTABLISHMENT]
Date: [DATE]
Subject: Application for payment of gratuity
Sir or Madam,
I apply for payment of the gratuity payable in respect of the employment described below. The particulars required are given, and the documents listed are enclosed.
1. Capacity in Which the Application Is Made
| Applicant is | Tick | Additional documents required |
|---|---|---|
| The employee, on resignation, retirement, superannuation or termination | [□] | Proof of identity; bank details |
| The employee, on disablement due to accident or disease | [□] | Medical certificate of disablement |
| A nominee, on the death of the employee | [□] | Death certificate; nomination on record; proof of identity |
| A legal heir, where no nomination is on record | [□] | Death certificate; legal heir or succession certificate; proof of relationship |
| A guardian, on behalf of a minor nominee or heir | [□] | Proof of guardianship; birth certificate of the minor |
2. Particulars of the Employee
| Item | Detail |
|---|---|
| Full name of the employee | [NAME] |
| [Son / daughter / wife of] | [NAME] |
| Employee identification number | [ID] |
| Designation and department | [DESIGNATION], [DEPARTMENT] |
| Establishment and place of work | [ADDRESS] |
| Date of joining | [DATE] |
| Date of cessation of employment | [DATE] |
| Total period of continuous service | [YEARS] years [MONTHS] months [DAYS] days |
| Reason for cessation | [Resignation / Retirement / Superannuation / Termination / Death / Disablement] |
| Last drawn wages as statutorily defined, per month | ₹ [AMOUNT] |
| Permanent account number | [PAN] |
| Universal account number | [UAN] |
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These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
The employer must determine the amount of gratuity as soon as it becomes payable and give notice of it to the person entitled, whether or not any application has been made. An employer that treats gratuity as payable only on request has the obligation the wrong way round, and interest runs on delay regardless of whether the employee asked.
Where gratuity is not paid within the period prescribed from the date it becomes payable, simple interest is payable for the period of delay at the rate prescribed. That exposure accrues automatically. Step 7 of the processing record is the one to track.
The computation uses the last drawn wages as the consolidated legislation defines them — basic, dearness allowance and any retaining allowance — with excluded components capped at half of total remuneration. A salary structured with a small basic and a large special allowance produces a much smaller gratuity figure than the statutory computation requires. Verify the wage base before computing.
The conventional computation is fifteen days’ wages for each completed year of continuous service, with the daily wage taken as the monthly wages divided by twenty-six. A part of a year exceeding six months is treated as a completed year. Both elements are frequently applied incorrectly in payroll systems.
Gratuity is ordinarily payable on completion of the qualifying period of continuous service. Where employment ends by death or disablement, that requirement does not apply and gratuity is payable regardless of length of service. This is the most commonly misapplied rule and it arises in the most sensitive circumstances.
A fixed-term employee is entitled to gratuity in proportion to service without completing the general qualifying period. Do not apply the ordinary rule to a fixed-term engagement.
Gratuity may be forfeited only on the limited grounds the law permits, and to the extent of the damage or loss caused, or wholly only in the specific circumstances allowed. Forfeiture as a general sanction for misconduct, or as leverage to recover an unrelated amount, is not permitted. Where any amount is withheld, state the ground and the order in the notice, as Section 6 requires.
Gratuity is a statutory entitlement and cannot be waived by agreement. Making its payment conditional on signing a full and final release is ineffective as to the gratuity and undermines the release. Pay it and deal with any settlement separately.
The absence of a nomination is what turns a straightforward payment into a months-long problem for a bereaved family, because succession must then be established. Collect nominations at induction and refresh them on marriage, birth and the death of a nominee. It is entirely within the employer’s control.
Where a nominee is a minor, the amount is dealt with in the manner the law provides, which may involve deposit with the controlling authority rather than payment to a guardian. Check the applicable procedure rather than paying to whoever presents the claim.
Gratuity received is exempt from tax up to the limits and on the conditions the income-tax law prescribes, which differ by category of employee. Determine the exempt portion before deducting tax, and issue the prescribed certificate for any tax deducted.
Where the amount is disputed, or payment is refused, the applicant may apply to the controlling authority, and there is a right of appeal from that authority’s decision. Employers should be aware that the forum is statutory and is not displaced by an arbitration clause in the employment contract.
Reflects Indian law current as of {{DATE OF USE}}. The prescribed forms, the statutory ceiling, the rate of interest on delayed payment, the qualifying period and the tax exemption limits all change — confirm each with a payroll specialist before computing, and use the prescribed form where one is prescribed by the State.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.