Employment & Social Security#061

Understanding Gratuity claim filing — Form I

File a gratuity claim on resignation or retirement after 5 years of service, or on death or disablement.

At a glance

Jurisdiction

Central — Payment of Gratuity Act, 1972; administered by the Controlling Authority (Labour Commissioner or designated officer) at the state / central level. Applies to factories, mines, oilfields, plantations, ports, railways, shops, and other establishments with 10 or more employees.

Who applies

An employee who has completed continuous service of five or more years with an employer and is leaving service (resignation, retirement, retrenchment, or death/disablement). Nominee or legal heir files the claim if the employee dies before claiming.

Typical time

Employer must pay within 30 days of gratuity becoming due. Disputes resolved by Controlling Authority within 60–90 days. Court appeals may take longer.

Fee

Nil — no fee charged for gratuity claim filing. Dispute application to Controlling Authority is also free.

Who should use this process

✓Minimum 5 years of continuous service with the same employer (4 years 240 days for employees in mines below ground or doing work of seasonal nature).
✓In case of death or disablement due to accident or disease, 5 years is waived — gratuity is payable regardless of service length.
✓'Continuous service' includes authorised leave, lay-off, strike (if not illegal), and maternity leave.
✓Applicable to establishments with 10 or more employees at any point; once covered, continues to apply even if strength falls below 10.
✓Gratuity is calculated at 15 days' last drawn wages per year of service (for employees not covered by weekly off — shops/establishments).

Who does NOT need to apply

✕Employees who are terminated for proven misconduct causing financial loss to the employer — gratuity may be forfeited in whole or in part.
✕Employees with less than 5 years of continuous service (except death/disablement cases).
✕Central / State Government employees covered under separate pension / service gratuity rules.
✕Establishments that do not meet the 10-employee threshold and have never crossed it.

Documents required

#	Document	Type needed	Purpose
1	Form I (Application for Payment of Gratuity by Employee)	Download / Print	Core form filed by the employee with the employer to formally claim gratuity; includes service details, gratuity amount claimed, and bank details.
2	Identity proof of employee (Aadhaar / PAN)	Self-attested Copy	Confirms the identity of the claimant.
3	Proof of continuous service (appointment letter, salary slips, relieving letter)	Self-attested Copy	Establishes 5+ years of continuous service with the employer.
4	Last drawn salary proof (salary slip for last month)	Self-attested Copy	Used to calculate the gratuity amount: (Last drawn basic salary + DA) × 15 / 26 × years of service.
5	Bank passbook / cancelled cheque	Self-attested Copy	Employer credits gratuity payment via NEFT / cheque to this account.
6	Resignation / retirement acceptance letter	Self-attested Copy	Confirms the reason and date of exit from service, establishing that gratuity has become due.
7	Death certificate of employee (for nominee/legal heir claim)(optional)Required only for death claims by nominee or legal heir.	Original	Required when the employee is deceased and the nominee or legal heir is claiming gratuity under Form J / Form K.
8	Disability certificate from competent medical authority (for disablement claim)(optional)Required only for disablement claims.	Original	Required when gratuity is claimed due to disablement (accident or disease) before 5 years of service.

Original documents: Carry originals only for in-person visits — do not hand them over permanently unless explicitly required.

Step-by-step guide

1
Calculate gratuity due and submit Form I to employer
Offline
Calculate the gratuity due using the formula: (Last drawn basic wages + DA) × 15/26 × years of service. Submit Form I to the employer's HR department within 30 days of leaving service. The form is available in the Schedule to the Payment of Gratuity Act or on the Shram Suvidha portal.
Within 30 days of last working dayEmployer HR Manager
2
Employer acknowledges receipt and sends Form L (gratuity notice)
Offline
The employer must acknowledge Form I and send Form L (notice of payment) specifying the amount of gratuity payable within 15 days of receiving the application. The employer must pay the gratuity amount within 30 days of becoming due.
Within 15 days of receiving Form IEmployer HR / Accounts
3
Employer pays gratuity within 30 days
Offline
Gratuity is paid by cheque or NEFT to the employee's bank account. The maximum gratuity payable under the Act is ₹20 lakh (enhanced from ₹10 lakh in 2018). If the employer disputes the amount, they must pay the undisputed portion and notify the Controlling Authority for the disputed part.
Within 30 days of gratuity becoming dueEmployer Accounts
4
If employer disputes or defaults — file Form N with Controlling Authority
Offline
If the employer does not pay within 30 days, denies gratuity, or pays less than due, file Form N (Application to Controlling Authority for recovery of gratuity) with the Controlling Authority (Labour Commissioner / designated officer) having jurisdiction over the establishment.
File within 1 year of gratuity becoming due (extendable in extraordinary circumstances)Controlling Authority (Labour Commissioner)
5
Controlling Authority hearing and order
Offline
The Controlling Authority serves notice on the employer and conducts a hearing. After examining evidence, issues an order directing payment of gratuity with simple interest at 10% per annum for the delayed period. Employer must comply within the time specified.
30–90 days for orderControlling Authority / Labour Commissioner
6
Appeal to Appellate Authority (if needed)
Offline
Either party may appeal the Controlling Authority's order to the Appellate Authority (typically a senior Labour Commissioner or Labour Court) within 60 days. The Appellate Authority's order is final; further challenge is via High Court writ.
60–180 daysAppellate Authority

Government officers involved

Employer HR Manager / Accounts Officer

Employer establishment

Payment — receives Form I, acknowledges, calculates, and pays gratuity.

Processes the gratuity claim, issues Form L, and makes payment within 30 days.

Controlling Authority

State or Central Labour Department

Dispute resolution — adjudicates disputes on amount or denial of gratuity.

Receives Form N, hears both parties, and issues binding order with interest for delayed payment.

Appellate Authority

State or Central Labour Department (senior officer / Labour Court)

Appeal — hears appeals against Controlling Authority's order.

Reviews the Controlling Authority's order and upholds, modifies, or reverses it.

Government portals

Shram Suvidha Portal

https://shramsuvidha.gov.in

Employer registration under central labour laws; gratuity compliance for centrally covered establishments; inspection reports.

Ministry of Labour and Employment — Payment of Gratuity Act

https://labour.gov.in/sites/default/files/ThePaymentofGratuityAct1972.pdf

Official Act text, forms (Form I, J, K, L, N), and rules for reference.

State Labour Department Portal (example — Maharashtra)

https://mahakamgar.maharashtra.gov.in

State-specific labour complaint filing and controlling authority contact details. Replace with your state's portal.

Things to watch out for

Gratuity is tax-free up to ₹20 lakh for private sector employees

Under Section 10(10) of the Income Tax Act, gratuity received from a non-government employer is tax-free up to ₹20 lakh. Amount above ₹20 lakh is taxable. Keep salary slips and Form 16 to claim the exemption correctly in your ITR.

Employer can forfeit gratuity for proven misconduct — but must follow due process

Section 4(6) of the Act permits forfeiture of gratuity (wholly or in part) if the employee's services were terminated for misconduct causing damage or loss to the employer. However, the employer must conduct a proper inquiry and issue a written order. Forfeiture without a process can be challenged before the Controlling Authority.

Interest at 10% accrues on delayed payment — claim it

If the employer does not pay within 30 days, simple interest at 10% per annum accrues on the gratuity amount from the date it was due. When filing Form N with the Controlling Authority, explicitly claim this interest — it is your statutory right.

Nominee vs legal heir — who gets gratuity on death

If the employee nominated a person under Form F, the nominee is entitled to gratuity. The legal heir must claim separately via Form K only if there is no nomination or the nominee has also died. Ensure your nomination is updated with your current employer's HR.

Continuous service definition is broader than unbroken employment

Under the Act, an employee is deemed in 'continuous service' even if there were interruptions due to sickness, accident, lay-off, legal strike, or leave. Employers sometimes claim the 5-year threshold is not met due to such breaks — this is legally incorrect.