What is Gratuity?
Gratuity is a lump sum amount paid by the employer to the employee as a token of appreciation for the services they have provided towards the company. Gratuity payment is one of the several components that make up the gross salary of long-term contract employee.
According to the Zambian labor laws, an employer shall at the end of a long-term contract period, pay an employee gratuity at a rate of not less than 25% of the employee’s basic pay earned during the period of the contract.
How does our Gratuity Fund Operate?
As a business we recognize the fact that the employer may either pay their employees the gratuity amount from their own account or opt to utilize our general gratuity fund management services.
When an employer engages us to manage their gratuity scheme, the company will make annual or monthly contributions for us to manage those provisions on their behalf, and in return, we meet the payments of gratuity amounts to the employee when instructed to do so by the employer. As part of our Gratuity Fund Management services, we are always mindful that employee’s gratuity values are eroded by annual inflation. Hence, as a way of creating value we seek to insulate these employees against the real loss of their gratuity by ensuring that the contributions received from their employers attains real growth per annum. As a result, employees can walk away with gratuity payouts that would be more than the contractual amounts with the extra value being the real growth of their funds over the period we managed their investments.
As a business, we nurture the very purpose of our existence, which is to invest responsibly for all our stakeholders and deliver on a sustainable business model that allows us positively to meet all our investors’ aspirations.
Please feel free to call us and speak with one of Client Portfolio Managers.