Gratuity on Death of an Employee — No Minimum Service Required

Why death and disability are treated as a full exception

The Payment of Gratuity Act (continued under the Code on Social Security) specifically waives the minimum-service requirement in cases of death or disablement due to accident or disease. This means even an employee who joined a week before their death is entitled to gratuity under this provision — there's no partial or pro-rated eligibility test here, the requirement is removed entirely, not reduced.

This waiver applies uniformly regardless of employment type — it isn't limited to permanent employees, and a fixed-term employee's death or disability similarly waives whatever eligibility period would otherwise have applied to them.

Who receives the payment and how it's computed

The gratuity amount is paid to the employee's nominee (as registered with the employer) or, absent a valid nomination, to the legal heir. The AMOUNT itself is still computed using the standard formula and wage base — the waiver applies only to the service-duration eligibility test, not to how the payable amount is calculated once the entitlement is established.

Disablement is treated the same way

Disablement due to accident or disease is treated identically to death for this purpose — the service-period requirement is waived, and gratuity becomes payable to the employee directly (rather than a nominee, since the employee is living) regardless of tenure completed.