Unpaid gratuity has its own route under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972 on 21 November 2025: a written application to the employer, the thirty days the Code gives for payment, and then an application to the competent authority (the officer the old Act called the Controlling Authority). The competent authority is an adjudicating officer with power to order payment with interest. It is faster and cheaper than a civil suit, and it is the remedy most employees never use.
Scope and jurisdiction at a glance
- Who is eligible
- Gratuity is payable under Section 53 of the Code on Social Security, 2020 to an employee who has rendered continuous service of not less than five years, on superannuation, retirement, resignation, death or disablement, or the end of a fixed-term contract. The five-year requirement does not apply where employment ends because of death or disablement, or on the expiry of fixed-term employment.
- How it is calculated
- For an establishment covered by the Code, gratuity is fifteen days' wages based on the last drawn rate for every completed year of service, computed on a month of twenty-six days. Service beyond six months in the final year is rounded up to a full year. “Wages” now follows the Code's definition, so allowances above half of total pay are added back.
- The statutory ceiling
- The Code caps the amount payable at a figure notified by the Central Government, and the ceiling has been revised over time. Confirm the ceiling currently in force before computing a claim.
- The three steps
- The Code and the rules under it prescribe their own procedure and forms:
- Apply to the employer in writing, in the prescribed form, ordinarily within thirty days of the gratuity becoming payable — though a claim is not invalid merely because the application is late.
- The employer must pay within thirty days of gratuity becoming payable (Section 56(3)), failing which simple interest runs on the amount (Section 56(4)).
- Where the employer does not pay or disputes the claim, apply to the competent authority under Section 56(5), in the prescribed form and within the time the rules allow.
- Which forum
- The competent authority appointed by the appropriate Government is the adjudicating officer, and an appeal from its order lies within sixty days to the appropriate Government or the authority it names (Section 56(8)). This is a statutory route and does not require a civil suit.
- When an employer can withhold it
- Gratuity may be forfeited wholly or partly only in the limited circumstances Section 53(6) specifies — broadly, where termination was for an act of wilful omission or negligence causing damage, or for riotous or disorderly conduct or an offence involving moral turpitude committed in the course of employment. A general allegation of misconduct is not enough.
- Fixed-term employees
- Under the Social Security Code a fixed-term employee becomes eligible on completing one year of service, without the five-year requirement that applies to other employees.
Gratuity is the one head of exit dues that comes with its own chapter of the law, its own adjudicating officer and its own prescribed forms. That is a considerable advantage, and almost nobody uses it. The default response to unpaid gratuity is to keep emailing HR, then to give up. Chapter V of the Code on Social Security, 2020, which took over from the Payment of Gratuity Act, 1972, offers something better: a forum that exists only for this, where the employer has to answer.
What follows is the sequence. It is deliberately narrow — this is about the mechanism, not about whether you are entitled in the first place. For that, and for the arithmetic, start with the exit guide.
Step one: the written application to the employer
Gratuity does not require an application to become payable. Section 56(2) of the Code puts the obligation on the employer to determine the amount and give notice of it, whether or not an application has been made. In practice, employers wait. So the first move is to put the claim in writing.
Section 56(1) asks for a written application to the employer in the form the rules prescribe. Which rules apply depends on whether the Central or the State Government is the appropriate Government for the establishment. The Central Government's rules under the Code, notified on 8 May 2026, replaced the 1972 Central rules and their Form I; where a State has not yet notified its own rules, its old gratuity rules and forms continue under the savings clause in Section 164 until they are replaced. Whichever applies, it is a short form: your particulars, dates of appointment and cessation, the cause of termination, the total period of service and the amount claimed. Send it by a method that produces proof — registered post with acknowledgement due, or email to the HR address on your appointment letter with a delivery record. Keep the receipt. Everything downstream depends on being able to show the date the demand was made.
The rules contemplate the employee applying within thirty days of gratuity becoming payable, but a claim is not invalid merely because the application is late. Do not treat a missed window as fatal, and do not use it as a reason to delay further.
Step two: the thirty-day clock, and what runs after it
Section 56(3) requires the employer to pay gratuity within thirty days of it becoming payable. Where the employer misses that window, Section 56(4) provides for simple interest on the delayed amount from the due date until payment, at a rate not exceeding the one notified by the Central Government for the repayment of long-term deposits — subject to the proviso that no interest is payable where the delay is due to the employee's own fault and the employer has obtained permission in writing from the competent authority.
Two practical points follow. First, the interest is statutory, not discretionary — it does not need to be pleaded as damages. Second, it materially changes the arithmetic on a long delay, and an employer that has been stalling for a year is often surprised to be shown the figure. Compute it and put it in the demand.
Step three: the claim before the competent authority
If the employer does not pay, disputes the amount, or simply does not answer, the dispute goes to the competent authority appointed by the appropriate Government (the Controlling Authority under the 1972 Act) — in practice an officer of the labour department for the area in which the establishment is situated. The application is made under Section 56(5), in the form the rules prescribe; under old State rules still in force, that is Form N.
This is an adjudication, not a formality. The competent authority has the powers of a civil court under Section 56(6) for the purposes of receiving evidence, enforcing attendance and compelling production of documents. It will hear both sides, and it can decide contested questions — whether the qualifying service was completed, whether the wages figure is right, whether a forfeiture was valid.
Where the authority finds an amount payable, it directs the employer to pay it. If the employer still does not pay, the competent authority can issue a certificate to the Recovery Officer under Section 129, who recovers the amount by attaching and selling the employer's property, appointing a receiver or, as a last resort, arrest and detention. That recovery mechanism is stronger than an ordinary money decree, and it is the reason this route is worth using rather than filing a civil suit.
An appeal against the competent authority's order lies under Section 56(8), within sixty days, to the appropriate Government or the authority it names. The period can be extended by another sixty days for sufficient cause, and an employer appealing must first deposit the amount found due.
When can an employer lawfully withhold gratuity?
Far more rarely than employers assume. Section 53(6) of the Code is exhaustive. Gratuity may be forfeited:
- to the extent of damage or loss caused to the employer by the employee's wilful omission or negligence — and only to that extent;
- wholly or partially, where services were terminated for riotous or disorderly conduct or any act of violence; or
- wholly or partially, where services were terminated for an offence involving moral turpitude committed in the course of employment.
Each of these requires the termination to have been for that reason, established through a process, with notice and an opportunity to be heard. Withholding gratuity pending "clearance", pending return of a laptop, pending signature on a general release, or because the employee joined a competitor, is not within Section 53(6). Nor is a bare allegation of misconduct where no inquiry was held.
A separate and frequently missed point: gratuity is payable on resignation as much as on termination or retirement, once the qualifying service is met. Section 53(1) speaks of superannuation, retirement or resignation, death or disablement, and the end of a fixed-term contract. An employer who says "you resigned, so no gratuity" is simply wrong.
The five-year question
Section 53(1) requires five years of continuous service, and the rounding rule in Section 53(2) — a part year beyond six months counted as a full year — applies to the computation once eligibility is established, not to eligibility itself. On the plain text, four years and seven months does not qualify.
There is, however, a line of High Court authority reading the fifth year as complete where 240 days of that year were worked, drawing on the definition of continuous service in Section 2A of the 1972 Act, which Section 54 of the Code carries forward. It is not a settled national position and it turns on which High Court's view governs the establishment. If you are close to five years, the point is worth taking in the written application and before the competent authority. It is not worth assuming in your own planning.
What this route does not cover
The competent authority's jurisdiction is gratuity. It will not compute your unpaid salary, your leave encashment or your notice pay. Those go elsewhere — a recovery application under Section 59 of the Industrial Relations Code where you are a worker, a claim before the authority under Section 45 of the Code on Wages for unpaid wages, a complaint to the Labour Commissioner, or a civil suit. Running gratuity separately is not a disadvantage — it is usually the fastest of the heads to resolve, because the statute is narrow and the arithmetic is fixed.
Common questions
Can an employer refuse gratuity if I resigned?
No. Section 53(1) of the Code on Social Security, 2020 (formerly Section 4(1) of the Payment of Gratuity Act) makes gratuity payable on superannuation, retirement or resignation, once five years of continuous service is complete. Resignation is expressly covered. An employer who treats resignation as disqualifying is misreading the section.
How long does the employer have to pay gratuity?
Thirty days from the date gratuity becomes payable, under Section 56(3) of the Code on Social Security. After that, simple interest runs on the delayed amount under Section 56(4), at a rate not above the one notified by the Central Government, unless the delay is attributable to the employee and the employer has written permission from the competent authority.
What form is used to claim gratuity?
The claim starts with a written application to the employer in the form prescribed by the rules of the appropriate Government. The Central rules notified in May 2026 replaced the old Form I; where a State has not yet replaced its old gratuity rules, Form I to the employer and Form N to the authority stay in use. If the employer does not pay or disputes the claim, the next step is an application to the competent authority under Section 56(5).
Can gratuity be forfeited for misconduct?
Only on the grounds in Section 53(6) of the Code on Social Security: damage or loss caused by the employee's wilful omission or negligence, limited to the extent of that loss; riotous or disorderly conduct or violence; or an offence involving moral turpitude committed in the course of employment. In each case the termination must have been for that reason, following a process with notice and a hearing.
What happens if the employer ignores the competent authority's order?
The competent authority can send a recovery certificate to the Recovery Officer under Section 129 of the Code, who then recovers the amount by attaching and selling the employer's property, appointing a receiver or, as a last resort, arrest and detention. That is a stronger recovery route than an ordinary money decree.
Work out the gratuity figure before you send the written application. The F&F Settlement Calculator applies the 15/26 formula on your dates and last drawn wages, adds Section 56(4) interest for the days beyond thirty, and gives you an itemised statement of dues to annexe.