Gratuity is a lump sum financial benefit paid by an employer to an employee as a token of appreciation for their long-term service. Governed by the Payment of Gratuity Act, 1972 in India, it is applicable to employees who have completed at least five years of continuous service in an organization. Gratuity serves as an important employee retention tool, especially in industries like manufacturing, retail, logistics, and facility management, where workforce stability is critical.

For businesses managing contract workers, gig employees, and blue-collar workforce, gratuity management ensures compliance with labor laws, financial planning, and seamless payroll processing. Companies leverage HRMS platforms and payroll automation systems to track employee tenure, calculate gratuity payouts, and ensure timely disbursement. A well-managed gratuity policy enhances employee loyalty, financial security, and overall workforce satisfaction.