Gratuity in Maharashtra
Reviewed by the Commoner Law Editorial Team. Sourced from Indian central (Union) law — Constitution of India, central Acts of Parliament, and Supreme Court decisions. State-level information reflects each state's own Acts and High Court rulings. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
Gratuity is a statutory terminal benefit payable by an employer to an employee who has completed at least five years of continuous service.
- Eligibility: Any employee (factory worker, plantation worker, mine worker, oilfield employee, port employee, or employee of an establishment with 10+ workers) who has completed 5 years of continuous service.
- If an employee dies or is permanently disabled, gratuity is payable even if 5 years have not been completed.
- Formula: (Last drawn basic salary + DA) × 15/26 × Number of completed years of service. Each year beyond 6 months counts as a full year; fractions below 6 months are ignored.
- Tax exemption: Gratuity up to ₹20 lakh is fully exempt from income tax for non-government employees (s. 10(10), Income Tax Act).
- Gratuity must be paid within 30 days of it becoming payable. Delays attract compound interest at the rate prescribed by the Central Government.
When does it apply?
- You resign, retire, or are retrenched after completing 5 years of continuous service with the same employer.
- You die or become permanently disabled while in service (5-year rule does not apply in these cases).
- Your employer refuses to pay or calculates gratuity at a lower amount than due.
What to Do If Your Employer in India Refuses to Pay Your Gratuity
- Submit Form I (Notice of Claim) to your employer within 30 days of gratuity becoming payable (or after death/disability, by your nominee/legal heir).
- Your employer must respond with Form L (Notice of Payment) within 15 days, specifying the amount and date of payment.
- If the employer refuses or pays less, file an application before the Controlling Authority (typically the Labour Commissioner) under s. 7 of the Act — the Controlling Authority can direct payment plus 10% per annum interest on delayed amounts.
- Appeals against the Controlling Authority's order lie to the Appellate Authority (within 60 days).
What should you NOT do?
- Do not resign just before completing 5 years without calculating whether gratuity is due — service just past the 4-year 6-month mark (treated as 5 full years) can trigger entitlement.
- Do not forfeit gratuity by committing an act of wilful omission or negligence causing loss/damage — gratuity can be forfeited wholly or partially in such cases (s. 4(6)).
- Do not accept a private settlement for less than the statutory amount without consulting a labour lawyer first.
How Maharashtra differs from central law
Gratuity rights in Maharashtra follow the central Payment of Gratuity Act, 1972, but the state has a significant body of case law from the Bombay High Court clarifying employer obligations. Gratuity is payable after 5 years of continuous service at 15 days' wages for each year of service (up to Rs. 25 lakh, the current ceiling).
The Maharashtra Shops and Establishments Act, 2017 also makes gratuity provisions applicable to employees of shops and commercial establishments. The Controlling Authority for gratuity claims in Maharashtra is the Assistant Labour Commissioner in each district. The Bombay High Court has consistently held that employers cannot deny gratuity merely because an employee was terminated, unless termination was for an offence involving moral turpitude resulting in a conviction.
Additional Steps in Maharashtra
File Form I (application for gratuity) with the Controlling Authority, which is the Assistant Labour Commissioner in your district. If the employer fails to pay within 30 days of it becoming due, interest is payable. Appeals lie to the Appellate Authority (Deputy/Additional Labour Commissioner) within 60 days.
Relevant Law: Payment of Gratuity Act, 1972, Sections 4 and 7; Maharashtra Shops and Establishments Act, 2017, Section 32
Common Questions
When does gratuity apply?
You resign, retire, or are retrenched after completing 5 years of continuous service with the same employer.You die or become permanently disabled while in service (5-year rule does not apply in these cases).Your employer refuses to pay or calculates gratuity at a lower amount than due.
What should I do if my employer in India refuses to pay my gratuity after I leave?
Submit Form I (Notice of Claim) to your employer within 30 days of gratuity becoming payable (or after death/disability, by your nominee/legal heir).Your employer must respond with Form L (Notice of Payment) within 15 days, specifying the amount and date of payment.If the employer refuses or pays less, file an application before the Controlling Authority (typically the Labour Commissioner) under s. 7 of the Act — the Controlling Authority can direct payment plus 10% per annum interest on delayed amounts.Appeals against the Controlling Authority's order lie to the Appellate Authority (within 60...
What mistakes should I avoid with gratuity?
Do not resign just before completing 5 years without calculating whether gratuity is due — service just past the 4-year 6-month mark (treated as 5 full years) can trigger entitlement.Do not forfeit gratuity by committing an act of wilful omission or negligence causing loss/damage — gratuity can be forfeited wholly or partially in such cases (s. 4(6)).Do not accept a private settlement for less than the statutory amount without consulting a labour lawyer first.
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