This particular act passed by the Indian legislature was an attempt to give some level of rights to workers in the face of big business. In this sense, the concept of "gratuity" is different than what is presented in the West. This vision is one where workers receive settlement or severance packages after they have been terminated from their business of employment. It can be considered a type of pension or compensation for services rendered to the organization:
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:- (i) on his superannuation; or (ii) on his retirement or resignation; or (iii) 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.
The act is designed to cover employees who work in minefields, oil rigs, railway companies, mines, and other industrial settings as such. In the act, there is some semblance of workers' rights being envisioned in the face of a strong business element. Failure to pay such compensation in the appropriate setting can result in governmental fines being levied against the company.