Gratuity Rules explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Chapter III of the Code on Social Security (Gujarat) Rules, 2023 (rules 5 to 8) is the working code for gratuity in Gujarat. This article states it as amended by the Amendment Rules dated 28 January 2026, which changed rule 7(a), second proviso, and substituted Form IV, the nomination form.
The rules are the Code on Social Security (Gujarat) Rules, 2023, as notified on 30 December 2023 (No. GR/2023/158/PGA/172021/24659/M3) and amended by the Code on Social Security (Gujarat) (Amendment) Rules, 2026 dated 28 January 2026. After the amendment, a fixed term employee is eligible for gratuity if he renders service under the contract for one year (rule 7(1)(a), second proviso; earlier "Five years"). The employer issues a Form VI notice within fifteen days of an application (rule 7(2)); the claimant goes to the competent authority within one hundred eighty days (rule 7(4)).
Later amendments and State notifications under these rules should be checked in the State Gazette.
Commencement and the amendment
Rule 1(3) reads: "They shall come into force from the commencement of the Code on Social Security, 2020." The four Labour Codes were brought into force from 21 November 2025. The Amendment Rules say, in rule 1(2), that they "shall come into force on the date of their publication in the Official Gazette"; the Gazette date is not printed in the notification text and no in-force date for the amendment is asserted here. The notification and Board rules are in our article on the notification, Employees' Insurance Court and Unorganised Workers' Board, and a rule-by-rule comparison is in the Amendment Rules article.
The Central rules are in rules 31 and 32 (gratuity for minors and nomination) and rule 33 (application and appeal). A payroll compliance audit can check whether your gratuity process follows the Gujarat periods below.
The steps at a glance
| Step | Rule | Form | Time limit as printed | Authority |
|---|---|---|---|---|
| Nomination by an employee already employed one year or more on commencement | 6(1)(i) | Form IV, in duplicate | Ordinarily within ninety days from commencement | Employer |
| Nomination on completing one year of service | 6(1)(ii) | Form IV | Ordinarily within thirty days of completing one year | Employer |
| Employer verifies and returns duplicate | 6(2) | Form IV | Within thirty days of receipt | Employer |
| Fresh nomination on acquiring a family | 6(3) | Form IV | Within ninety days of acquiring a family | Employer |
| Application for gratuity (employee) | 7(1)(a) | Form V | Ordinarily within thirty days from the date gratuity became payable | Employer |
| Application by nominee | 7(1)(b) | Form V (plain paper accepted) | Ordinarily within thirty days | Employer |
| Application by legal heir | 7(1)(c) | Form V | Ordinarily within one year | Employer |
| Employer's notice on the claim | 7(2) | Form VI | Within fifteen days of receipt; payment date not later than the thirtieth day after receipt | Applicant; copy of a denial to the competent authority |
| Application for direction | 7(4) | Form VII | Within one hundred eighty days of the cause | Competent authority |
| Direction to pay | 7(11) | Form IX | Payment within thirty days of receipt of the notice | Employer |
| Application for recovery | 7(13) | Form X, in duplicate | When the employer fails to pay per the notice | Competent authority |
Nomination (rule 6)
A nomination is made in Form IV, in duplicate, delivered by personal service against a receipt, by registered post acknowledgement due, or electronically with read receipt. A nomination filed after the specified period is accepted and is not invalid merely for being late. Within thirty days of receipt, the employer verifies the service particulars against the establishment's records and returns the attested duplicate against a receipt. A notice of modification, including where a nominee predeceases the employee, is also in Form IV. The form is signed by the employee or, if illiterate, bears a thumb impression, and takes effect from the date the employer receives it. Form IV, as substituted in 2026, is headed "Nomination/Fresh Nomination/Modification of Nomination" and includes the employee's declaration on family within clause (33) of section 2 of the Code, a table of nominees with their proportions, witnesses' declaration, the employer's certificate and the employee's acknowledgement.
Application and notice (rule 7)
- Who applies and when. The employee or a person authorised in writing applies in Form V, ordinarily within thirty days from the date the gratuity became payable, and may apply before that date if the date of superannuation is known. A nominee applies within the same thirty days (a plain-paper application with the relevant particulars is also accepted); a legal heir ordinarily within one year.
- Fixed term employees (as amended). The second proviso to rule 7(1)(a) provides that an employee on fixed term employment is eligible for gratuity if he renders service under the contract for a period of one year, and is paid gratuity at the rate of fifteen days' wages, based on the rate of wages last drawn, for every completed year of service or part thereof in excess of six months.
- Late applications. An application filed after the period is entertained if the applicant shows sufficient cause, and no claim is invalid merely for delay; any dispute goes to the competent authority.
- Employer's notice. Within fifteen days of receiving an application, the employer, if the claim is admissible, issues a Form VI notice stating the amount and a payment date not later than the thirtieth day after receipt; if not admissible, a Form VI notice with the reasons, and a copy endorsed to the competent authority. Where the claimant is a nominee or legal heir, the employer may call for evidence of identity or maintainability, and the time limit then runs from the date the evidence is furnished.
- Mode of payment. By demand draft or credit to the bank account of the employee, nominee or legal heir, with intimation of the payment details to the competent authority of the area (rule 7(3)).
- Minor nominee (rule 5). The competent authority invests the gratuity for a minor in a term deposit with the State Bank of India or any Nationalised Bank.
Competent authority, appeal and recovery (rule 7(4) to (13) and rule 8)
If the employer refuses a nomination or an application, issues a notice that the claimant considers too low or denies eligibility, or fails to issue the notice in time, the claimant may within one hundred eighty days of the cause apply in Form VII to the competent authority (with as many extra copies as there are opposite parties); the authority may accept it late on sufficient cause. The authority issues a Form VIII notice calling both sides, records its finding, and may proceed ex parte if the employer fails to appear; such an order may be reviewed on good cause shown within thirty days, with not less than fourteen days' notice before rehearing. If the claim succeeds, a Form IX notice directs the employer to pay within thirty days of receipt. On appeal, the opposite party submits comments within fourteen days of receiving the memorandum, and after the appellate decision a modified Form IX notice requires payment within fifteen days of receipt. If the employer still does not pay, the claimant applies in Form X for recovery under section 129. Under rule 8, the competent authority is appointed by the Government of Gujarat by notification.
A worked example
Pavagadh Foods Pvt Ltd, Vadodara, engages a technician on a fixed term contract of one year. Under the amended proviso he can claim gratuity after that one year of service under the contract. He applies in Form V; the company has fifteen days to issue a Form VI notice with the amount and a payment date no later than the thirtieth day from receipt. If the company says nothing, he has one hundred eighty days to apply in Form VII to the competent authority.
Need help with gratuity compliance?
Gratuity disputes usually turn on a missed notice or a missing nomination. Our payroll compliance audit reviews the nomination records, the notice process and the payment trail against the Gujarat rules.
Key takeaways
- A fixed term employee is eligible after one year of service under the contract (as amended).
- Nominations are in Form IV; the employer returns the attested duplicate within thirty days.
- Applications are in Form V; the employer's Form VI notice follows within fifteen days.
- The claimant may apply to the competent authority within one hundred eighty days.
- Unpaid gratuity is recovered on a Form X application under section 129.
Read next
- Code on Social Security (Gujarat) Rules, 2023: notification, Employees' Insurance Court and Board
- Code on Social Security (Gujarat) Rules, 2023: maternity benefit claims and crèche
- Code on Social Security (Gujarat) (Amendment) Rules, 2026: what changed
- Rule 33 of the Central Rules: application for gratuity and appeal
Disclaimer: Based on the State or Union territory rules named above, as notified under the Labour Codes and consulted on 4 October 2026. Later amendments, State notifications, fees and forms should be checked in the State Gazette and on the State labour department website. This article is general information, not legal advice; check the official text before acting.