Retirement Gratuity: What Employers Owe

If you employ staff through a Mauritian company, the portable retirement gratuity is one of the recurring payroll obligations that is easy to overlook. It is not a lump sum you plan for at the end of someone's career. Under the Workers' Rights Act 2019, the employer's liability is built up month by month through contributions to a national fund, usually referred to as the PRGF. This guide explains what an employer owes, how the monthly declaration works, and how to avoid the usual errors.

It is general information, not advice. Rates, ceilings and eligibility conditions are set by legislation and by the Mauritius Revenue Authority (MRA), and they change. Always check the current text, or ask an adviser, before you fix your payroll settings.

What the portable retirement gratuity is

Before the scheme, retirement gratuity worked as a one-off payment by the employer when a worker reached retirement age or left under certain conditions. The employer had to find the money at that moment, and a worker who changed jobs could lose the accumulated entitlement.

The portable model changes both points:

• the employer contributes regularly during employment instead of paying one large sum later;
• the entitlement follows the worker from one employer to the next, which is why it is called "portable";
• the money sits in a fund and not on the employer's balance sheet as an open-ended promise.

For the employer, the practical result is a monthly cost line that should appear in your budget and payroll, next to the other statutory charges. The contributions to the National Savings Fund are a separate subject, covered in NSF contributions and payroll returns.

Who is covered and who is not

The scheme is built around the employment relationship, not around the nationality of the worker or the size of the company. As a rule of thumb:

• an employee working under a contract of employment in Mauritius is the starting point;
• some categories may be treated differently, for instance workers already covered by another arrangement that the law recognises, or individuals who are genuinely independent and not employees;
• foreign staff on a work permit are generally still employees, so the question of contributions arises for them too. See hiring foreign staff and work permit basics and paying a foreign employee.

Whether a particular person is inside or outside the scheme depends on their contract, their status and the current rules. That analysis belongs with a qualified adviser, particularly for directors who are paid through payroll, part-time workers and people working remotely for a Mauritian company.

How the monthly declaration works

The contribution is declared and paid alongside the other monthly payroll returns filed with the MRA. In practice an employer:

1. closes the payroll for the month and confirms the list of employees;
2. computes the contribution for each employee on the base prescribed by law;
3. includes the amounts in the monthly return filed through the MRA's online services;
4. pays the total by the statutory due date, with the other payroll charges.

If you already file the monthly return for employee deductions, the gratuity contribution becomes one more line of the same exercise. The mechanics of online filing are described in filing with the MRA online, and the whole monthly sequence is in running monthly payroll step by step.

An employer must first be registered with the MRA in that capacity; see registering as an employer before hiring.

How the contribution is calculated

The amount is not negotiated. It is the result of three inputs, each fixed by legislation or regulation:

Two points deserve attention.

Base definition. Employers often assume the base is simply the basic salary shown on the payslip. Some payments may be included and others excluded. Misreading the base is the most frequent reason for a short payment, so write down, once, which pay elements your payroll software includes and have that choice checked.

Part months and variable pay. A worker who joins or leaves mid-month, or whose pay varies with overtime or commission, produces a different base each month. The calculation has to be repeated monthly and cannot be fixed once for the year. See calculating net pay for the wider payroll logic.

What happens when employment ends

The contributions already paid are not returned to the employer. They belong to the worker's entitlement in the fund, and what the worker receives and when is governed by the law and by the fund's rules, not by the company.

The employer's remaining obligations at the end of a contract are mostly about accuracy and paperwork:

• file the final month's contribution on the right base, including any final payments that count;
• keep proof of every monthly declaration made for that worker;
• deal with notice and severance separately. That is a different set of rules, explained in ending an employment contract: notice and severance.

Do not mix the two. A severance payment is an event-driven amount that depends on the circumstances of the termination, while the portable gratuity contribution is a monthly, routine charge.

Common mistakes by employers

• Treating the old lump-sum approach as still current. Some companies still accrue a provision "for later" and declare nothing monthly.
• Leaving directors or shareholders off the list when they are on the payroll as employees.
• Copying the base from another charge. The base for one payroll contribution is not automatically the base for another. Compare them in payroll taxes in Mauritius compared.
• Declaring late. Late declaration can bring penalties and interest, and the cost accrues quietly. The general picture is in penalties for non-compliance.
• Losing the monthly proofs. When a former employee queries their entitlement years later, the employer needs a clean trail.

Records to keep

Keep, for each employee and each month: the payroll computation, the base used, the amount declared, the filing acknowledgment and the proof of payment. Also keep the employment contract and any document explaining why a person was treated as inside or outside the scheme. The duration for which payroll records must be retained is covered in company records: what to keep and for how long.

• Employer registered with the MRA for payroll
• List of employees reconciled with the contracts
• Contribution base defined in writing and checked
• Monthly computation reviewed before filing
• Declaration filed and payment made by the due date
• Acknowledgments and proofs filed in the payroll folder

Where it fits in the annual routine

The gratuity contribution is a monthly task, but it should still appear in your yearly review: reconcile the twelve monthly declarations with the payroll ledger, check that leavers and joiners were handled on the right dates, and make sure the totals match the accounts. The annual compliance checklist and the compliance calendar are the right places to add it. If your company has hotels, restaurants or similar seasonal staffing, the variations described in payroll for hotels and restaurants make the monthly check even more important.