The Payment of Gratuity Act, 1972 is applicable to every factory, mine, oilfield, plantation, port and railway company, every shop or establishment within the meaning of any law in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf. Once the Act becomes applicable to an organization i.e. once an establishment hires more than 10 employees, the Act would continue to apply to the same even after the number of employees gets reduced below the minimum requirement.

Gratuity, in simple terms, is a retirement benefit paid as gratitude to the employees who have rendered a continuous service for at least five years to incentivize them so that they continue working efficiently. It is an amount paid to an employee based on the duration of his total service but an employee becomes eligible only after he has completed 5 years of his service. The pre-requisite of 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 to the extent that the person is literally unable to provide the required services.

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is enacted to provide a kind of social security to the industrial workers. The security, however, differs from the security provided to them under the Workmen's Compensation Act or the Employees' State Insurance Act. The Employees' Provident Funds and Miscellaneous Provisions Act mainly provide retirement or old age benefits, such as Provident Fund, Superannuation Pension, Invalidation Pension, Family Pension and Deposit Linked Insurance.

The Employees' Provident Funds and Miscellaneous Provisions Act isintended to provide wider terminal benefits to the industrial workers. For example, the Act provides for payment of terminal on reaching the age of superannuation, voluntary retirement and retirement due to incapacity to work.

ESI Act is applicable, in the first instance, to all factories other than seasonal factories. Once the establishment is covered by the Act, the employer is liable to pay contribution in respect of the employees in respect of repairs and maintenance of the establishment. The factory or the establishment shall continue to be governed by the Act notwithstanding the fall in the number of persons employed or discontinuance of the use of power. Every employee employed in or in connection with the work of a factory or establishment covered by the Act and drawing wages up to Rs. 15,000.00 per month (with effect from 1 May 2010) is required to be insured under the Act. The following six kinds of benefits are provided under the Act; i) Sickness benefit, ii) Maternity benefit, iii) Disablement benefit, iv) Dependents’ benefit, v) Medical benefit and vi) Funeral expense.

As per provisions of the Act, contribution period and Benefit period are periods fixed for the purpose of paying contributions and deriving benefits under the Act. In respect of the contribution period from 1st April to 30th September, the corresponding benefit period shall be from 1st January of the year following, to 30th June; and in respect of the contribution period from 1st October to 31st March of the year following, the corresponding benefit period shall be from 1st July to 31st December of the year following. In the case of a newly employed person, the first contribution period shall commence from the date of employment, and the corresponding first benefit period shall commence on the expiry of 9 months from the said date.

The employer is prohibited from dismissing or discharging an employee during the period the employee is in receipt of any benefit under the Act. Any notice of dismissal or discharge given to an employee in contravention of this provision will be invalid and inoperative. Besides, the employer dismissing or discharging an employee in contravention of this provision would be punished as per the provisions of the Act.