Gratuity: Meaning, Types, and Legal Provisions

Gratuity is the amount of money given to express appreciation for services rendered, either as a tip or a statutory employment benefit. A gratuity as a tip is a discretionary payment made to service workers such as waiters or taxi drivers as a reward for good service. Gratuity in employment refers to a lump sum that the employer must legally pay the employee at the time of his or her long service, retirement, or resignation. Its amount is often calculated as a percentage of the salary and years of service an employee has accumulated. Each country or jurisdiction imposes its own sets of requirements and rules for gratuity, such as eligibility and method of computation