Gratuity in Uttar Pradesh
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 Uttar Pradesh differs from central law
Gratuity in Uttar Pradesh follows the central Payment of Gratuity Act, 1972. Employees who have completed 5 years of continuous service are entitled to gratuity at the rate of 15 days' wages for each year of service, subject to a current ceiling of Rs. 25 lakh. The Controlling Authority for gratuity claims in UP is the Assistant Labour Commissioner in each district.
The Allahabad High Court (now with benches at Allahabad/Prayagraj and Lucknow) has decided numerous gratuity disputes, particularly involving public sector undertakings and educational institutions. The High Court has held that teachers in unaided private schools in UP are entitled to gratuity once they complete 5 years of service, and that managements cannot deny this right merely because the institution is privately run.
For workers in UP's large unorganized sector, enforcement remains a challenge. Brick kiln workers, domestic workers, and construction workers often do not receive gratuity despite being legally entitled after 5 years. The Building and Other Construction Workers (BOCW) Board, UP provides some parallel benefits for registered construction workers.
Additional Steps in Uttar Pradesh
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 Labour Commissioner) within 60 days. The Labour Commissioner, UP headquarters is in Kanpur. Helpline: 1800-180-5412.
Relevant Law: Payment of Gratuity Act, 1972, Sections 4 and 7; UP Shops and Commercial Establishments Act, 1962
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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