What is the difference between indemnity and gratuity

If the employer or his representative has misled the worker at the time of entering into the service contract as to the terms and conditions of the work. If continuance with the work endangers the safety and health of the worker provided that the employer is aware of the danger and does not take the necessary steps to remove it.

In addition to any sums to which the worker is entitled to upon the expiry of his service, the employer shall pay the end of service gratuity to the worker who has completed employment of one year or more.

The employer is entitled to deduct from the service gratuity the amount due to him by the worker. If the worker dies during the employment for whatsoever causes, the employer shall within a period not exceeding fifteen days from the date of death deposit with the court any wages or entitlements due to the worker in addition to the gratuity.

The depositing record shall contain a detailed report indicating the method of calculating the sums referred to and a copy of the record shall be delivered to the Department. The court shall distribute the deposited sums amongst the heirs of the deceased worker in accordance with the provisions of the Islamic Sharia or the personal law applicable in the country of the deceased and if three years lapse from the date of depositing without the person entitled to the deposited sums being known the court shall transfer the said sums to the public fund of the State.

The employer who maintains a retirement system or a similar system which secures for the worker a greater benefit than the end of service gratuity to which the worker is entitled under the provisions of Article 54 of this law shall not be obligated to pay to the worker the end of service gratuity in addition to the benefit available to the worker under the said system. If the net benefit accruing to the worker under the said system is less than the end of service gratuity the employer shall pay to the worker the end of service gratuity and return to him any sum whereby the worker may have contributed to the said system.

The worker may choose to receive either the end of service gratuity or the pension accruing to him under the said system. Notification, which shall be deemed to have been achieved by a written letter to the worker containing a notification of the violation he has committed and requesting him not to repeat the commission thereof and warning him of the infliction of a severer penalty in case of repetition. Deduction from the wage of the worker for a period not exceeding five days in respect of one violation.

Suspension from work together with non-payment of the wage for a period not exceeding five days in respect of one violation. Suspension from work without payment or with reduced payment pending the adjudication upon the criminal charge attributed to the worker and if the worker is acquitted or if the charge against him has been dropped the suspension shall be deemed to have never taken place and the worker shall be paid his entitlements during the suspension period.

Postponement of the grant of annual increment for a period not exceeding six months or the non-payment therefrom in the establishments which maintain increments systems. Postponement of promotion for a period not exceeding one year in the establishments which maintain promotion systems. Dismissal from work with payment of the end of service gratuity. Dismissal from work and non-payment of the end of service gratuity. The employer may dismiss the worker without notice and without payment of the end of service gratuity in the following instances.

If the worker assumes a false identity or nationality o r submits false certificates or documents. If the worker commits an act which causes gross financial loss to the employer provided that the employer shall notify the Department of the incident within twenty four hours from the time of his being aware thereof. If the worker violates more than once the written instructions of the employer concerning the safety of the workers and the establishment despite his being notified in writing of the violation provided that these instructions shall be written and posted up in a conspicuous place.

If the worker fails more than once to carry out his essential duties under the service contract or this law despite his having been notified in writing thereof. If the worker discloses the secrets of the establishment where he is employed.

Any period taken by the employee as unpaid leave is excluded when determining the service period. That means unpaid leave days are excluded when accruing gratuity.

The period of service is reduced by the number of days served as unpaid leave. Can an employer withhold gratuity payment? As per Article , the employer may dismiss the worker without compensation in any of the following instances:. Although in most countries employers are obliged to register in that country for tax purposes when hiring employees, it is not always required to establish a legal entity.

There are, however, quite a few countries where no separate legal entity is to be established for the purpose of hiring employees, but a branch office is to be opened instead. In the majority of countries, a written employment contract is mandatory. This is particularly true for specific types of employment contracts, such as fixed-term contracts.

Some countries do not explicitly require written employment contracts, but the employer has to provide a written statement with some key details regarding the employment relationship such as remuneration, working hours, time of payment, vacation entitlements etc. As such, the agreement can be drafted in a mutually understood language. In all other countries, it is mandated that the employment contract be drafted in one of the national language s. In these countries, parties can always provide a translation of the contract in another language, but in case of discrepancies between both versions, the version in the official language will always prevail.

In case there is no employment contract in the official language, the most common consequence is that the contract cannot be used as evidence in court, or is not enforceable until a translation has been provided. In general, during the probation period, it is easier to dismiss an employee because either a shorter notice period applies, or the dismissal does not need to be motivated. In almost all countries it is allowed to include probationary periods in the employment contracts. The exceptions are Belgium and Chile, where probation periods are not allowed by law.

Thai labor law is silent on probation periods, but in practice, parties can agree to put it in place. The maximum term of the probation period often depends on the job level. The higher the rank, the longer the probation period can be. In France for example, the maximum probation period is two months for office workers, but four months for executives. In 22 countries it is mandatory to organize a medical examination before hiring someone, regardless of the position they are applying for.

In most countries, reference and education checks are permissible with consent of the individual, bearing in mind data protection and privacy considerations.

For criminal background checks, either consent of the individual is required, or the employee needs to be applying for specific jobs justifying such a check. In 11 countries, however, criminal background checks are allowed for each hiring.

In most of these countries, they do not however fully enjoy the same protection as regular employees, as they fall outside the scope of some specific regulations for example, executives are often excluded from working time regulations.

If they are self-employed, their rights are not governed by employment law, but by commercial law and the terms agreed on in their contract with the company. Back to top. Given the geographical span of the guide and the wide variety in employment law rules, it is difficult to draw general conclusions that cover the whole world. Analysis of the countries in scope showed that countries in all regions often recognize a number of similar concepts with respect to individual termination of employment contracts.

In Brazil, Colombia and Ecuador, a dismissal with reason is only possible when based on reasons stipulated by law. However, while in Ecuador no indemnities are due provided the employer complies with a very strict process with up-front government approval, in Colombia a severance indemnity is due, and in Brazil, both an indemnity in lieu of notice and a severance indemnity are due. Although the same principle applies, the interpretation and legal context can vary widely.

Many legal systems also reflect similar concepts such as summary dismissal for fault or serious reason, and protection against dismissal for certain categories of employees e. In most of these countries, the notice period can be replaced by an one-off compensatory indemnity in lieu of notice which generally equals the remuneration the employee would have received during the notice period , or a type of garden leave which typically implies that the employee is not meant to work anymore, but will continue to stay in service and receive regular salary payments until the notice period expires.

In a minority of the countries, the employee is required to work the notice period or for the employer to obtain the explicit consent of the employee to have it replaced by an indemnity in lieu, or a garden leave arrangement.

In most of the countries, the length of the notice period is connected with the number of years served. In general terms, a severance indemnity concerns a payment which the employer is obliged to make because it dismissed the employee, or because it is standard practice to negotiate with the individual on such a payment. You shall not assign your rights and obligations under this Agreement to any other party. Legal Disclaimers. The information provided on or through the Website is for general guidance and information purposes only and they do not in any manner indicate any assurance or opinion of any manner whatsoever.

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First Name Last Name. Gratuity is a lump sum amount paid by the employer to the employee as a token of appreciation for the services they have provided towards the company.

It is important to know what are the eligibility and the amount of gratuity that an employee will receive. What is Gratuity in Salary? Gratuity is the monetary amount which is payable to the employee of an organisation under the Payment of Gratuity Act Gratuity payment is one of the several components that make up the gross salary of the employee. However, an employee is eligible to receive the gratuity amount only after they complete a period of 5 or more years with the company.

It is generally a token amount paid by the company showing gratitude towards the employee for their services towards the organisation. Read also : How is Retirement Gratuity Calculated? Calculate Now. Plan Now. Which of these Financial Solutions would you like advice on? Life Insurance. Health Insurance. Business Loan.