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last modified Oct 16, 2012 Gratuity is one of three prevalent retirement benefits in the private sector employment. The other two are ensions and rovident !und". #t is a lump$sum" amount of money payable to a wor%er on leavin& service.
West Pakistan Industrial and Commercial Establishments (Standing rdinance" #$%& Payment o' Wages (ct" #$)% *actories (ct" #$)+ Sho,s and Establishments rdinance" #$%$
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#n accordance with section 1(9) of the 2tandin& Orders Ordinance, 1,66, every commercial establishment (employin& 20 or more wor%ers) and industrial establishment (employin& :0 or more wor%ers) are re.uired to pay &ratuity to a wor%er once he;she has met the minimum criteria. The table below shows all the or&ani7ations liable to pay &ratuity to their wor%ers. 4ommercial 5stablishments 1dvertisin&;commission;forwardin& 1&ency, clerical department of a factory, >oint stoc% company, <inimum #ndustrial =umber of 5stablishments 3or%ers 1t least 20 !actory wor%ers must be employed by 1 <inimum =umber of 3or%ers 1t least :0 wor%ers must be employed by
#nsurance company, ban%in& company, ban%, bro%er office, stoc% e*chan&e, 4lub, hotel, restaurant, 4inema, theater, Other or&ani7ations as declared and notified by the &overnment
?ailways 5stablishment of a contractor the or&ani7ation the or&ani7ation 5stablishment in for continuous for continuous connection with 12 months 12 months construction industry
What are the .uali'ying events 'or ,ayment o' gratuity to a worker?
1n employee is entitled to &ratuity when8 1. /e resi&ns from his service (voluntary retirement or voluntary redundancy in e*chan&e for financial benefits li%e &olden handsha%e schemes) 2. /is or&ani7ations terminates his services due to reasons other than misconduct @. /e dies while in service of his employer (it is not necessary that employee should be on duty at the time of death) 9. /e reaches the superannuation a&e and retires /owever, if an employeeAs services were terminated on account of misconduct (li%e harassment, theft etc.), &ratuity would no lon&er be admissible to him. #n case of death of a wor%man, &ratuity is payable to the le&al dependents of a wor%man. 1s mentioned above, death may not necessarily occur on duty but the wor%er should be
in continuous service at that time. The amount of &ratuity, in this case, is transferred to '3or%men 4ompensation 4ommissioner' who will then allocate this amount to the dependents of a wor%er. The dependents of a deceased wor%er include 'his widowed mother, his own widow, minor son and unmarried dau&hter'.
+onus (at the end of year indicatin& profitable situation 10,000 for firm) Total len&th of service 1dmissible period for calculation of &ratuity To calculate &ratuity, 0ast drawn monthly &ross pay 2: years and 6 months 26 years ?s. @0,000
ay per day One year &ratuity (pay per dayD@0) Gratuity for the whole period served i.e. 26 years