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gratuity

gruh-TOO-ih-tee /ɡrəˈtuːəti/

nounC1GRECAT

FormalLegal

A sum of money paid to an employee at the end of a period of employment, or a tip given for a service.

In a professional context, a gratuity is often a legally mandated lump sum paid to an employee when they retire or leave after many years of service. In a service context, it's just a 'tip.'

The story behind the word. Derived from the Latin 'gratus' (pleasing or thankful), a gratuity was originally a 'free gift' given out of pure kindness. In the modern world, it has become a structured part of pay, either as a tip for service or a reward for long-term loyalty.

Word relationships

tip: Tip is the informal, everyday word; gratuity is the formal, legal, or bill-printed word.

Commonly confused with

bonus: A bonus is for performance; a gratuity is often for length of service or as a standard thank-you.

Word family

gratuitous (adjective): Given freely; also means uncalled for or lacking good reason.

Collocations

automatic gratuity
retirement gratuity
gratuity fund
service gratuity

Example sentences

"A gratuity is a sum of money given to a person who has rendered a service." A legal definition of service rewards.
"An 18% gratuity will be automatically added to parties of six or more." A restaurant bill note.

Memory hook

GRAT-uity: It's a sign of GRAT-itude for your work. Money for gratitude.

When not to use

In the US, 'tip' is much more common for restaurants; 'gratuity' is used on formal bills or in legal employment contracts.

Fun facts

In India and the Middle East, 'Gratuity' is a specific legal benefit paid to employees who complete five or more years with a company.
The word 'gratuitous' comes from the same root but is often used negatively today (e.g., 'gratuitous violence').