An amount of money given by the employer to an employee at the time of retirement, for the services rendered by the employee, is called:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Gratuity
Gratuity is a lump sum the employer pays an employee at retirement, for the years of service. It is a social security benefit of formal sector workers.
Option (1) Provident fund — Incorrect. A provident fund is a savings fund to which both employer and employee contribute regularly.
Option (2) Maternity benefit — Incorrect. It is support given to a woman worker at childbirth, not a payment at retirement.
Option (3) Gratuity — Correct. It is paid by the employer at retirement.
Option (4) Daily wage — Incorrect. A daily wage is pay for each day’s work, as a casual labourer gets.
NCERT (2026-27): Glossary: “Gratuity – An amount of money given by the employer to the employee at the time of retirement for services rendered by the employee.” Glossary: “Provident Fund – A savings fund in which both employer and employee contribute regularly in the interest of the employee. It is maintained by the government and given to the employee when he or she resigns or retires from work.” |