law: Payment of Gratuity Act, 1972
  4.Payment of gratuity.-
  (1) Gratuity shall be payable to an employee on the termination
  
  of his employment after he has rendered continuous service for not less than
  
  five years,-
  (a) on his superannuation, or
  (b) on his retirement or resignation, or
  (c) on his death or disablement due to
  
  accident or disease;
  Provided that the completion of continuous service of
  
  five years shall not be necessary where the termination of the employment of
  
  any employee is due to death or disablement :
  Provided further that in the case of death of the
  
  employee, gratuity payable to him shall be paid to his nominee or, if no
  
  nomination has been made, to the heirs.
  Explanation.- For the purposes of this section, disablement
  
  means such disablement as incapacitates an employee for the work which he was
  
  capable of performing before the accident or disease resulting in such
  
  disablement.
  (2) For every completed year of service or part thereof in
  
  excess of six months, the employer shall pay gratuity to an employee at the
  
  rate of fifteen days' wages based on the rate of wages last drawn by the
  
  employee concerned :
  Provided that in the case of piece-rated employee,
  
  daily wages shall be computed on the average of the total wages received by him
  
  for a period of three months immediately preceding the termination of his
  
  employment, and, for this purpose, the wages paid for any overtime work shall
  
  not be taken into account :
  Provided further that in the case of an employee
  
  employed in a seasonal establishment, the employer shall pay the gratuity at
  
  the rate of seven days' wages for each season.
  (3) The amount of gratuity payable to an employee shall not
  
  exceed twenty months' wages.
  
  
  (4) For the purpose of computing the gratuity payable to an employee who is employed,
  
  after his disablement, on reduced wages, his wages for the period preceding his
  
  disablement shall be taken to be the wages received by him during that period,
  
  and his wages for the period subsequent to his disablement shall be taken to be
  
  the wages as so reduced.
  (5) Nothing in this section shall affect the right of an
  
  employee to receive better terms of gratuity under any award or agreement or
  
  contract with the employer.
  
  
  (6) Notwithstanding anything contained in sub-section (1),-
  (a) the gratuity of an employee, whose
  
  services have been terminated for any act, willful omission or negligence
  
  causing any damage or loss to, or destruction of, property belonging to the
  
  employer, shall be forfeited to the extent of the damage or loss so caused;
  (b) the gratuity payable to an employee shall
  
  be wholly forfeited,-
  (i) if the services of such employee have been
  
  terminated for his riotous or disorderly conduct or any other act of violence
  
  on his part, or
  
  
  (ii) if the services of such employee have been terminated for any act which
  
  constitutes an offence involving moral turpitude, provided that such offence is
  
  committed by him in the course of his employment.
  Comment: "The right to gratuity is also a
  
  statutory right. The appellant was not charged with nor was given an
  
  opportunity that his gratuity would be withheld as a @page-SC1927 measure of
  
  punishment. No provision of law has been brought to our notice under which,
  
  the. President is empowered to withhold gratuity as well, after his retirement
  
  as a measure of punishment. Therefore, the order to withhold the gratuity as a
  
  measure of penalty is obviously illegal and is devoid of
  
  jurisdiction.": D.V. Kapoor v. Union of India AIR 1990 SUPREME
  
  COURT 1923