A gratuity is one of a number of forms of payment in the public or private sector. Variations of gratuities include: retirement gratuity; longevity gratuity; service gratuity. Retirement gratuities are paid at the time of the employee’s retirement from the service. Longevity and service gratuities can be based on an employee’s salary and total years of service. This amount of a gratuity may consist of a lump sum or an annuity, or a combination of both.