Should Gratuity be Discontinued?


Gratuity is a social security benefit that is provided by all employers, be it a large company or a small HR agency that has more than 10 employees in an organization to their employees in appreciation of service. It is usually paid after retirement, death or resignation of employees. It is a lump sum payment which is offered to employees who have served a company for at least 5 years.

Before we judge whether or not gratuity should be discontinued, let’s have a look at some benefits and side effects of this scheme.



Gratuity allows all kinds of employees be it Marketing Managers or HR Consultants to feel secure because they know that if they resign or retire, their efforts would be appreciated and they won’t be penniless.

Boosted Loyalty

It is a fact that any company, be it an HR agency or an MNC which provides gratuity has better employee loyalty levels and low attrition levels as compared to a firm that doesn’t provide this benefit.

Better Compliance

A company or HR agency that has more than 10 employees is bound by law to provide this benefit to all regular employees. If a company doesn’t follow this rule, it might land into legal trouble.

Employer Brand Value

The employer brand value of a company is increased if it provides this benefit to all its employees.

Side Effects


From the employer’s perspective, offering this benefit is an added cost. This is the reason companies these days prefer hiring freelance consultant over regular employees.

Time Consuming

The task of offering and calculating this benefit is very time-consuming for a company.

Not Worth It

As the value of money depreciates with time some employees believe that the amount they are getting is not worth the efforts they have put in.

Need to Hire a Professional

Companies often have to hire an added resource, a freelance consultant at least to calculate gratuity and ensure its timely dispersal.

Should Gratuity be Discontinued?

No, this is a vital benefit and can be considered a type of social security. This benefit must never be discontinued. In contrast, efforts should be made to ensure that everyone including work from home professionals or a freelance consultant is also covered by this benefit.

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