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What is Gratuity :

Gratuity comes from the word gratitude and is a term which is widely used in employment circles but is hardly ever clearly understood.

Most employers realise that a good employee is an asset and they express their gratitude by paying them some monetary reward.

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This monetary reward for the services rendered by an employee to the company/organisation is termed gratuity.

It typically forms a component of the salary an employee receives and is considered a benefit plan by many.

Employees who have completed 5 years of service with a company/organisation are eligible for gratuity, making it an incentive for people to stick to their work.

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Gratuity and National Pension System :

The Government of India is one of the largest employers in the world, with millions of employees putting in years of hard work and dedication to ensure smooth functioning.

The government, on its part has been known to look after its employees, with a number of schemes and programs designed to benefit them.

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In a bid to provide more benefits, the government is considering a proposal under which employees who have opted to be part of the National Pension System would be given gratuity.

Since NPS came into force in 2004, the rules of Central Civil Services for pension are not currently applicable to employees who came into the government after December 31, 2003.

Gratuity and components surrounding it were changed in 2004 and employees were covered on a provisional basis from 2009, offering them retirement gratuity benefits.

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