Gratuity, as we all know, is a benefit program that is organized to offer a reward prize to its employees for rendering extraordinary services to a single organization consistently for 5 years. It is a token of appreciation and honor in the form of cash that the employee earns after every 5 years that he dedicates to one company. Now, do you really think this is all – a Benefit Program? Indeed it is! A simple yet impactful way of making the employees feel good and valued for working hard. Now, imagine what possible legal obligation could this scheme give to the company besides being viewed as a potential employee benefit?
Keeping in mind the liability it becomes on the finance of a company, it is not always perceived as a win-win situation. Having said that, there is also a huge advantage that it brings to the table – Employee Retention. As an employer, you always need a loyal & hardworking workforce for maintaining long-term business relationships and Gratuity can act as a driving force to achieve the same.
Let us see how Gratuity is not just a benefit program for the employees but also an Employee Retention Strategy for the employers:
It Gives Them Reason To Look Forward And Stay
Once an employee joins an organization, he needs a lot of time to adjust and adapt to the company culture and procedures. And only after he finds a comfort zone at the workplace or finds a reason to stay, he is not going anywhere. This trust and faith can be easily built using the gratuity scheme. Also, when employees are engaged in finding out the details about it, they get more intrigued. For instance, if you organize seminars about the essence of gravity, gratuity calculation formula and how & when it should be withdrawn, they will start waiting for the time to get maximum output from it. As a result, employees find a reason to stay in the same company and give it their best!
It Helps Them Build Trust In The Company
In the 1980s, when no labor laws or government schemes were laid out for workers, gratuity was introduced to make them happy about their work and the company. Soon, it got converted into something that employers saw as a bait to make the employees stick to their companies for a long duration. Cash rewards are presented every 5 years to the loyal professionals and this makes the employees have faith in their respective companies. They start believing that if an organization can walk the extra mile and go out of their way to reward them, they actually care. And who wouldn’t want to feel valued?
It Motivates Them To Do Retirement Savings
Not only does it make the employees feel happy and help the companies retain them, but the gratuity plan can also promote the retirement savings culture amongst the working professionals. Schemes like EPF (Employees’ Provident Fund) and ESI (Employees’ State Insurance) are already functioning well in this area. But imagine how big the employees can save using this particular program if they continue for a very long time. Today, the maximum limit for the companies to offer to their employees as a gratuity amount is INR 10 lakhs which can help resolve a gamut of retirement problems and make lives easier.