Payment of Gratuity Act, 1972Updated June 2026

FnF Demand Letter — Gratuity Not Paid
After Resignation or Termination

If your gratuity has not been paid after resignation, retirement, or termination, your employer is in breach of a statutory deadline — not a discretionary courtesy. Under the Payment of Gratuity Act, 1972, gratuity must be paid within 30 days, with interest on any delay. This guide explains exactly who qualifies, how the amount is calculated, and gives you a free editable demand letter template plus a 3-minute generator to escalate the matter formally.

✓ Cites Sections 4, 7(3), 7(3A) & 9✓ Auto-calculated gratuity amount✓ 15-day response deadline built in✓ Controlling Authority escalation clause✓ Free editable template included

Last updated: June 2026Reviewed by: OfficeDraft Legal TeamLegislation: Payment of Gratuity Act, 1972 · Gratuity (Central) Rules

Key numbers

Statutory payment deadline30 days

Minimum service required5 years

Gratuity cap (statutory)₹20 lakh

Controlling Authority filing fee₹0 (free)

Interest on delayed paymentGovt-notified rate

Generator price₹49 only

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Gratuity unpaid for more than 30 days? That is a direct violation of Section 7(3) of the Payment of Gratuity Act. You are entitled to the principal amount plus interest, and can file Form N with the Controlling Authority free of cost. Jump to How to File a Complaint or generate your demand letter now.

Table of Contents

What Is Gratuity?

Gratuity is a lump-sum statutory benefit paid by an employer to an employee as recognition of long, continuous service, governed by the Payment of Gratuity Act, 1972. It is not a bonus, a goodwill gesture, or something the employer can choose to skip — it is a legal entitlement that accrues automatically once you meet the eligibility conditions.

Gratuity becomes payable on termination of employment for any reason — resignation, retirement, retrenchment, or death — provided the employee has rendered the minimum qualifying service. It applies to every "establishment" covered under the Act: factories, mines, oilfields, plantations, ports, railway companies, shops, and establishments employing 10 or more persons.

Who Is Eligible for Gratuity?

Eligibility for gratuity depends on years of continuous service and the reason for separation. The table below covers the most common scenarios — check which one applies to you.

Scenario	Eligible?	Note
Resignation after 5+ years continuous service	Yes	Standard statutory eligibility under Section 4(1).
Resignation after 4 years 240 days (factory/mine/plantation)	Yes (case law)	Upheld by courts treating this as a completed 5th year.
Termination for misconduct (non-violent)	Yes	Gratuity cannot be forfeited for ordinary misconduct or poor performance.
Termination for riotous/violent conduct or moral turpitude	May be forfeited	Only under Section 4(6), and only with documented due process.
Death or permanent disablement (any service length)	Yes	The 5-year requirement is waived under the proviso to Section 4(1).
Resignation before 5 years (no death/disablement)	Generally no	Unless your appointment letter contractually promises pro-rated gratuity.
Fixed-term contract employees, completing the term	Yes (if 5 yrs)	Treated the same as permanent employees for gratuity purposes.

How Gratuity Is Calculated

For employees covered under the Act, the formula is fixed by Section 4(2):

Gratuity = (Last drawn Basic + DA) ÷ 26 × 15 × Number of completed years of service

26 represents working days in a month; 15 represents 15 days' wages per year of service. A service period of 6 months or more beyond a completed year is rounded up to the next full year.

Last Drawn Basic + DA	Years of Service	Formula	Gratuity Payable
₹25,000	6	(25,000 ÷ 26) × 15 × 6	₹86,538
₹40,000	8	(40,000 ÷ 26) × 15 × 8	₹1,84,615
₹60,000	12	(60,000 ÷ 26) × 15 × 12	₹4,15,385

Note: the statutory ceiling on tax-exempt gratuity is currently ₹20 lakh. Employers may contractually offer more, but the Act guarantees only up to this cap.

When Must an Employer Pay Gratuity?

Section 7(3) of the Payment of Gratuity Act is unambiguous: gratuity must be paid within 30 days from the date it becomes payable — ordinarily your last working day. This is a hard statutory deadline, not a target or industry guideline.

If payment is delayed beyond 30 days for any reason attributable to the employer, Section 7(3A) entitles you to simple interest on the gratuity amount, at a rate notified by the Central Government, calculated from the due date until the date of actual payment.

Can an Employer Delay Gratuity Payment?

Employers commonly cite informal reasons to delay gratuity. None of the following hold up as a legal defence:

"Awaiting management/HR approval"

Not a valid legal defence. Section 7(3) sets a hard 30-day deadline regardless of internal sign-off processes.

"Pending no-dues clearance"

Gratuity and clearance are separate processes. Withholding statutory gratuity over an unrelated clearance issue is not permitted.

"Company is facing financial difficulty"

Gratuity is a statutory liability, not discretionary. Financial hardship is not a recognised defence under the Act.

"You resigned without notice, so forfeited"

Notice period violations may attract separate contractual consequences, but gratuity forfeiture is limited strictly to Section 4(6) grounds.

Legal Rights Under the Payment of Gratuity Act

Section 4(1) — Entitlement

Gratuity is payable on termination after 5 years of continuous service, or earlier in case of death or disablement.

Section 7(3) — 30-Day Deadline

The employer must pay gratuity within 30 days of it becoming due, regardless of internal approval processes.

Section 7(3A) — Interest on Delay

Delayed payment attracts simple interest at the government-notified rate from the due date to the actual payment date.

Section 8 — Recovery as Arrears

Unpaid gratuity confirmed by a Controlling Authority order can be recovered as if it were arrears of land revenue — a powerful enforcement mechanism.

Section 9 — Penalties

Employers who avoid payment through false statements or refuse to comply with an order can face fines and imprisonment.

Important: Gratuity cannot be made conditional

Courts have repeatedly held that an employer cannot condition gratuity payment on signing a "no-objection" or settling unrelated disputes. Gratuity is an independent statutory right that survives any other disagreement with your employer.

How to Draft a Demand Letter for Unpaid Gratuity

Follow these six steps to write a demand letter that holds up if escalated to the Controlling Authority.

State your identity and service record

Full name, employee ID, designation, department, date of joining, and last working day.

State the date gratuity became due

Usually your last working day. This anchors the 30-day statutory clock under Section 7(3).

Show your calculation

Last drawn basic + DA, divided by 26, multiplied by 15, multiplied by completed years of service. Attach your payslip as proof of basic salary.

Cite the exact legal sections violated

Section 4 (entitlement), Section 7(3) (30-day deadline), and Section 7(3A) (interest on delay).

Set a firm response deadline

15 days is standard and gives the employer a fair, documented opportunity to comply before escalation.

State your escalation intent

Clearly note that non-payment will result in a complaint to the Controlling Authority under the Payment of Gratuity Act, with interest and possible prosecution under Section 9.

Editable Demand Letter Template

Copy this template, fill in your details in the bracketed fields, and send it by registered post and email. For an auto-filled, professionally formatted version with state-specific clauses, use the generator below.

Date: [DATE] To, [HR Manager / Authorised Signatory Name] [Company Name] [Company Registered Address] Subject: Demand for Payment of Gratuity Under Section 7(3), Payment of Gratuity Act, 1972 Dear Sir/Madam, I, [Your Full Name], was employed with [Company Name] as [Designation] (Employee ID: [ID]) from [Date of Joining] to [Last Working Day], a continuous period of [X] years and [X] months. Under Section 4(1) of the Payment of Gratuity Act, 1972, I am entitled to gratuity for my period of service. As per the formula prescribed under Section 4(2), my gratuity is calculated as: (Last drawn Basic + DA of ₹[AMOUNT]) ÷ 26 × 15 × [X] years = ₹[TOTAL AMOUNT] As of the date of this letter, [X] days have passed since my last working day, exceeding the 30-day deadline prescribed under Section 7(3) of the Act. I am therefore also entitled to interest on the delayed amount under Section 7(3A). I hereby demand payment of the above gratuity amount, along with applicable interest, within 15 days of receipt of this letter. Please note that if payment is not received within this period, I will be compelled to file Form N before the Controlling Authority under the Payment of Gratuity Act, 1972, and pursue all available legal remedies, including recovery proceedings under Section 8 and prosecution under Section 9. I trust this matter will be resolved amicably without the need for further escalation. Yours faithfully, [Your Full Name] [Contact Number] | [Email Address] [Current Address] Enclosures: Payslips, Appointment Letter, Resignation Acceptance, Relieving Letter

Sample Filled Example

Here is how the template looks once filled in for a hypothetical employee — Anjali Sharma, who served 6 years and is owed gratuity 45 days after her last working day.

Name: Anjali Sharma · Designation: Senior Analyst · Service: 6 years

Last drawn Basic + DA: ₹35,000/month

Calculation: (35,000 ÷ 26) × 15 × 6 = ₹1,21,154

Days overdue: 45 days past the Section 7(3) deadline — interest under Section 7(3A) applies

Deadline given to employer: 15 days from receipt, after which Form N will be filed with the Controlling Authority

What Documents Should You Attach?

Strengthen your demand letter — and your future complaint — by attaching these documents.

Document	Why It Matters
Appointment / Offer Letter	Establishes date of joining and basic salary structure.
Last 3 Payslips	Proves last drawn basic + DA — the figure used in the gratuity formula.
Resignation Letter & Acceptance	Confirms your last working day, which triggers the 30-day payment clock.
Relieving Letter / Exit Clearance	Shows lawful separation, countering any "abandonment" defence.
Any Prior FnF Communication	Demonstrates you already raised the issue informally before this formal demand.
Form I (Gratuity Application, if filed)	If you already applied to your employer using Form I under the Gratuity Rules, attach a copy.

India · Payment of Gratuity Act, 1972 · All States

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Your details

These appear as the sender on the demand letter.

Full name *

Designation *

Employee ID (optional)

Personal email *

Phone *

Current address *

City *

State *

Pincode *

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How to File a Complaint for Unpaid Gratuity

If your demand letter's 15-day deadline passes without payment, the formal route is to file Form N under the Payment of Gratuity (Central) Rules, 1972, with the Controlling Authority appointed for your area — typically a designated Labour Department officer.

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Step 1: Fill Form N

State your service details, the gratuity amount claimed, and attach supporting documents and your demand letter.

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Step 2: Submit to Controlling Authority

File at the office having jurisdiction over your employer's establishment. No filing fee is required.

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Step 3: Hearing & Evidence

The Authority can summon the employer, examine wage records, and verify your claimed service period and salary.

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Step 4: Order for Payment

A favourable order directs the employer to pay the gratuity amount plus interest within a specified period.

Labour Commissioner vs Controlling Authority

Employees often confuse these two — they handle different statutes and different remedies.

	Labour Commissioner	Controlling Authority
Governing law	Payment of Wages Act, 1936 / Industrial Disputes Act	Payment of Gratuity Act, 1972
Handles	Unpaid salary, FnF wages, leave encashment, incentives	Unpaid or disputed gratuity claims specifically
Form used	Written complaint / application	Form N (Gratuity Rules)
Outcome	Direction to pay + compensation up to 10× under Section 15	Direction to pay + interest under Section 7(3A)

If your employer owes you both unpaid salary and unpaid gratuity, you may need to file separately — a complaint to the Labour Commissioner for salary dues, and Form N with the Controlling Authority for gratuity. Our FnF Demand Letter generator covers both wage dues and gratuity in a single combined letter.

What Happens If the Employer Refuses?

Here is the complete escalation path once you've sent your demand letter and the employer still refuses to pay.

Send the Gratuity Demand Letter (15-day deadline)

First step

Creates a documented record citing Sections 4, 7(3) and 7(3A). Send by registered post and email for evidentiary value.

File Form N with the Controlling Authority

Free

If unpaid after the deadline, file Form N under the Payment of Gratuity (Central) Rules with the Controlling Authority — typically a Labour Department officer — in the district of your employer's establishment. No filing fee.

Controlling Authority Hearing & Order

Binding order

The Controlling Authority can summon the employer, examine records, and pass an order directing payment of gratuity plus interest under Section 7(3A).

Appeal / Recovery Proceedings

Enforceable

If the employer still does not comply, the order can be executed as a decree, and the amount recovered as arrears of land revenue under Section 8.

Prosecution Under Section 9

Criminal liability

Wilful non-payment of gratuity after a Controlling Authority order can attract criminal prosecution against the employer, including imprisonment and fine.

Official government resources

↗Ministry of Labour & Employment — India ↗Shram Suvidha Portal — Online Labour Complaint ↗Payment of Gratuity Act, 1972 — IndiaCode ↗Payment of Gratuity (Central) Rules — IndiaCode ↗Employees' Provident Fund Organisation (EPFO)↗eSHRAM — Unorganised Worker Registration

About This Guide

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Updated June 2026

This page reflects the Payment of Gratuity Act, 1972, the Payment of Gratuity (Central) Rules, and relevant judicial precedent as currently in force.

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All States & UTs

Coverage applies across all establishments covered under the Act, including factories, IT companies, BPOs, retail, mines, plantations, and ports, in all 28 states and 8 Union Territories.

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Educational only

This content is for information and education purposes and does not constitute legal advice. For complex gratuity disputes involving forfeiture or large claim values, consult a qualified employment lawyer.

Frequently Asked Questions — Gratuity Not Paid

How many days does an employer have to pay gratuity after resignation?▾

Under Section 7(3) of the Payment of Gratuity Act, 1972, the employer must pay gratuity within 30 days from the date it becomes payable — i.e., from your last working day. If payment is delayed beyond 30 days, Section 7(3A) entitles you to simple interest on the delayed amount from the due date until actual payment.

Am I eligible for gratuity if I resign before completing 5 years?▾

Generally no — Section 4(1) requires 5 years of continuous service. However, employees in factories, mines, and plantations benefit from the "4 years 240 days" rule upheld by courts. Gratuity is also payable before 5 years in cases of death or disablement, regardless of service length. Always check your appointment letter for any more favourable contractual terms.

Can my employer deduct losses or dues from my gratuity?▾

Section 4(6) allows forfeiture only in narrow circumstances — termination for riotous or disorderly conduct involving violence, or an act constituting an offence involving moral turpitude during employment. Ordinary financial losses, unreturned property, or "pending dues" cannot be set off against gratuity without due process directly linked to misconduct.

What should a gratuity demand letter include?▾

An effective gratuity demand letter should state your name, employee ID, designation and dates of service; the date your gratuity became due; the calculated amount; the specific sections of the Act violated; a 15-day deadline; and a clear statement of intent to escalate to the Controlling Authority if unpaid.

Where do I complain if my employer refuses to pay gratuity?▾

File Form N under the Payment of Gratuity (Central) Rules with the Controlling Authority appointed under the Act — typically a Labour Department officer in the district where the employer is located. The Authority can direct payment plus interest, and the employer may face prosecution under Section 9 for non-compliance.

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Legal Disclaimer

This page is provided for educational and informational purposes only and does not constitute legal advice. The content summarises the Payment of Gratuity Act, 1972 and the Payment of Gratuity (Central) Rules as currently in force as at June 2026. It may not reflect subsequent legislative or judicial changes.

Reviewed by the OfficeDraft Legal Team — last updated June 2026. OfficeDraft is not a law firm and does not provide regulated legal services. For complex gratuity disputes, including forfeiture claims or high-value recovery, consult a qualified employment lawyer or the Ministry of Labour & Employment, India.

Payment of Gratuity Act · All 36 States & UTs · Auto-calculated amount

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FnF Demand Letter — Gratuity Not PaidAfter Resignation or Termination