Compliances Related to Gratuity under Code on Social Security (Gujarat) Rules, 2023

Compliance Requirements under the Rules in Accordance with the Code

1. Form VI: Notice for Payment of Gratuity (Section 56, Rule 7(2) of Code on Social Security (Gujarat) Rules, 2023)

Within fifteen days of receiving an application for gratuity, the employer must issue notice to the employee in Form VI — indicating either that the claim is admissible or that it is not. Where the claim is denied, a copy of the notice must be endorsed to the competent authority of the area.

2. Payment of Gratuity (Section 53(1), Rule 7 of Code on Social Security (Gujarat) Rules, 2023, as amended by the Code on Social Security (Gujarat) (Amendment) Rules, 2026, and Rule 33 of Code on Social Security (Central) Rules, 2026

Gratuity is payable to an employee on termination of employment after five years of continuous service in cases of: (a) superannuation; (b) retirement or resignation; (c) death or disablement due to accident or disease; (d) expiry of a fixed-term contract; or (e) any other event notified by the Central Government. Completion of five years’ service is not required where termination is due to death, disablement, expiry of a fixed-term contract, or a notified event. In case of death, gratuity is paid to the nominated person or, if no nomination exists, to the legal heirs; where the nominee or heir is a minor, the amount is deposited with the notifie authority and invested in a term deposit with the State Bank of India or a nationalised bank until the minor attains majority. Employees on fixed-term contracts are eligible for gratuity after completing one year of service under the contract, at the rate of fifteen days’ wages per completed year of service or part thereof in excess of six months.

3. Computation of Gratuity Payable (Sections 53(2), (3), (4), (5) of Code on Social Security, 2020)

Gratuity is payable at fifteen days’ wages (or such number of days as the Central Government may notify) for every completed year of service or part thereof in excess of six months, based on the employee’s last drawn wage. For a monthly-rated employee, fifteen days’ wages are calculated by dividing the monthly rate of wages last drawn by twenty-six and multiplying the quotient by fifteen. For piece-rated employees, daily wages are based on the average total wages for the three months preceding termination, excluding overtime. Seasonal employees receive gratuity at seven days’ wages per season. The total gratuity payable shall not exceed the amount notified by the Central Government. For employees whose wages were reduced after disablement, the pre-disablement wage is used for the period before disablement and the reduced wage for the period threafter. Nothing in this section affects an employee’s right to receive better gratuity terms under any award, agreement, or contract with the employer.

4. Forfeiture of Gratuity (Sections 53(6), 54 of Code on Social Security, 2020)

Gratuity payable to an employee terminated for causing damage, loss, or destruction to employer property may be forfeited to the extent of the damage or loss caused. Gratuity may be wholly or partially forfeited where an employee is terminated for riotous or disorderly conduct, an act of violence, or committing an offence involving moral turpitude during the course of employment. For the purposes of computing continuous service: an employee is in continuous service if their service has been uninterrupted, including interruptions due to sickness, accident, leave, absence without leave, lay-off, strike, lock-out, or cessation of work not caused by the employee. An employee not in continuous service is deemed so if, in the preceding year, they worked at least one hundred and ninety days (for underground or less-than-six-day-workweek establishments) or two hundred and forty ays (for others); and at least ninety-five or one hundred and twenty days respectively for a six-month period. In seasonal establishments, seventy-five percent of operational days suffices.

5. Form IV: Nomination for Gratuity (Section 55, Rule 6 of Code on Social Security (Gujarat) Rules, 2023)

Employees must submit a gratuity nomination in Form IV in duplicate — in person with receipt, by registered post with acknowledgement due, or electronically with read receipt — within ninety days if already employed for a year or more on the date the Rules commence, or within thirty days of completing one year of service if employed thereafter. A nomination submitted after the prescribed period remains valid. The employer must verify the employee’s particulars in Form IV within thirty days and return a duly attested copy. Aadhaar details of nominees must be provided. Employees without family must submit a fresh nomination within ninety days of acquiring family. Any modification must also be made in Form IV, signed or thumb-impressed before two witnesses. A nomination or modification takes effect from the date reeived by the employer. Where an employee has family, the nomination must be in favour of one or more family members; nomination in favour of non-family members is void.

6. Mode of Payment of Gratuity (Section 56, Rule 7(3) of Code on Social Security (Gujarat) Rules, 2023)

Gratuity payable under the Code must be paid by way of Demand Draft or by crediting the amount directly to the bank account of the eligible employee, nominee, or legal heir, as the case may be. The employer must also intimate the details of the payment to the competent authority of the area.

7. Compulsory Insurance for Gratuity Liability (Section 58 of Code on Social Security, 2020)

Employers (excluding Central and State Government establishments) must obtain insurance from an IRDAI-regulated insurer to cover their gratuity liability, from the date notified by the appropriate Government. Employers with an approved gratuity fund (including those employing five hundred or mor workers who establish such a fund) may be exempted under prescribed conditions. Every establishment must register with the competent authority, and registration is permitted only where insurance has been taken or an approved gratuity fund exists. Different notification dates may apply to different establishments or areas. If premiums or contributions to the fund are not paid, the employer must pay gratuity directly along with applicable interest.

8. Time Period for Keeping Records under Chapter V (Gratuity) (Rule 82(2) of Code on Social Security (Gujarat) Rules, 2023)

Records maintained under the provisions of Chapter V of the Code (Gratuity) and the rules framed thereunder must be preserved for a period of two years from the date of their preparation.

9. Form XXXIII: Unified Annual Return — Establishments to which Chapter V (Gratuity) Applies (Rule 82(3) of Code on Social Security (Gujarat) Rules, 2023)

Every employer to which the provisions of Chapter V (Gratuity) of the Code apply must upload a unified annual return in Form XXXIII on the web portal of the Labour, Skill Development and Employment Department, Government of Gujarat, on or before 1st February of each year, providing information in respect of the preceding year.