Section 7 — Determination of the amount of gratuity.

7. Determination of the amount of gratuity.—(1) A person who is eligible for payment of gratuity 

under this Act or any person authorised, in writing, to act on his behalf shall send a written application to 

the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. 

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in 

sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the 

person to whom the gratuity is payable and also to the controlling authority specifying the amount of 

gratuity so determined.  
1
[(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it 

becomes payable to the person to whom the gratuity is payable. 

(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the 

period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes 

payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the 

Central Government from time to time for repayment of long-term deposits, as that Government may, by 

notification specify: 

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the 

employee and the employer has obtained permission in writing from the controlling authority for the 

delayed payment on this ground.] 

(4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as 

to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the 

person entitled to receive the gratuity, the employer shall deposit with the controlling authority such 

amount as he admits to be payable by him as gratuity.  

2
*   *   *   *   * 

3
[(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the 

employer or employee or any other person raising the dispute may make an application to the controlling 

authority for deciding the dispute.]  

4
[(c) The controlling authority shall, after due inquiry and after giving the parties to the dispute a 

reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of 

such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the 

employer to pay such amount or, as the case may be, such amount as reduced by the amount already 

deposited by the employer.]  

5
[(d)] The controlling authority shall pay the amount deposited, including the excess amount, if any, 

deposited by the employer, to the person entitled thereto.  

6
[(e)] As soon as may be after a deposit is made under clause (a), the controlling authority shall pay 

the amount of the deposit— 

(i) to the applicant where he is the employee; or 

                                                           
1. Subs. by Act 22 of 1987, s. 7, for sub-section (3) (w.e.f. 1-10-1987). 

2. The Explanation omitted by Act 25 of 1984, s. 4 (w.e.f. 1-7-1984). 

3.  Ins. by s. 4, ibid. (w.e.f. 1-7-1984). 

4. Subs. by s. 4, ibid., for clause (c) (w.e.f. 1-7-1984). 

5. Clause (c) re-lettered as clause (d) thereof by s. 4, ibid. (w.e.f. 1-7-1984). 
6. Clause (d) re-lettered  as clause (e) thereof by s. 4, ibid. (w.e.f. 1-7-1984). 



9 
 

(ii) where the applicant is not the employee, to the 
1
[nominee or, as the case may be, the guardian 

of such nominee or] heir of the employee if the controlling authority is satisfied that there is no 

dispute as to the right of the applicant to receive the amount of gratuity. 

(5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority shall 

have the same powers as are vested in a court, while trying a suit, under the Code of Civil Procedure, 

1908 (5 of 1908), in respect of the following matters, namely:— 

(a) enforcing the attendance of any person or examining him on oath; 

(b) requiring the discovery and production of documents; 

(c) receiving evidence on affidavits; 

(d) issuing commissions for the examination of witnesses. 

(6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 

and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860). 

(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of 

the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be 

specified by the appropriate Government in this behalf: 

Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is 

satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said 

period of sixty days, extend the said period by a further period of sixty days:  

2
[Provided further that no appeal by an employer shall be admitted unless at the time of preferring the 

appeal, the appellant either produces a certificate of the controlling authority to the effect that the 

appellant has deposited with him an amount equal to the amount of gratuity required to be deposited 

under sub-section (4), or deposits with the appellate authority such amount.] 

(8) The appropriate Government or the appellate authority, as the case may be, may, after giving the 

parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of 

the controlling authority.