Gratuity Calculator: 9 years of service and Rs 50,000 as the last-drawn basic salary; what will be gratuity amount
Gratuity Calculator: Public and private sector employees are eligible to get gratuity from their employers on completion of 5 years of service. The number of years of service and the last drawn basic salary are taken into account while calculating gratuity.
Know Your Gratuity Amount: When we work for an employer for a long time, we need some appreciation from them. The best form of appreciation can be that they acknowledge our task with some monetary reward. Gratuity is that reward. It is mandated by the government that employers following the Payment of Gratuity Act, 1972, must provide gratuity to their employees when they complete 5 years of service. Employees get gratuity at the time of leaving the organisation. In this write-up, know about who is eligible to give gratuity to their employees, how gratuity is calculated, and what will be the gratuity amount for a person with 9 years of service and a last-drawn basic salary of Rs 50,000.
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Who gets gratuity?
Any employee who has completed 5 years of service under conditions such as the resignation or retirement, termination of their employment, death, or their disablement due to some accident or a disease.
Which organisations come under The Payment of Gratuity Act, 1972
As per the Act, the eligible employees to get gratuity are those working in a mine, factory, mine, plantation, oilfield, railway company, port, shop, or in an establishment where 10 or more persons are employed or were employed on any day of the preceding 12 months.
Other criteria for employers to provide gratuity
Other than the above-mentioned conditions, other eligible employees for gratuity are those working in establishments or classes of establishments in which 10 or more employees are employed, or were employed, on any day of the preceding 12 months, as per the Central Government specification, are also eligible for gratuity.
Can establishment move out of the Gratuity Act?
Once a shop or establishment comes under the Gratuity Act, it will remain under it forever, even if the number of employees in them falls below 10.
How is gratuity amount calculated?
Two factors that are considered to count gratuity are the last-drawn basic salary of an employee and the number of their service.
How is the gratuity amount calculated?
If there are two employees who have completed 5 years of service and were drawing the same last basic salary, the one with more years of service will get a higher gratuity amount.
Formula to calculate gratuity
The formula to calculate gratuity is = (Last drawn basic salary) X (Number of years in employment) X (15/26)
Explanation of gratuity formula
As per the Gratuity Act, for every completed year of service in excess of six months, the employer shall pay gratuity to an employee at the rate of 15 days of wages based on the rate of wages last drawn by the employee. In the formula, 26 is the number of working days in each month after excluding Sundays.
Gratuity on Rs 50,000 last-drawn basic pay and 9 years of service?
A person with 9 years of service and Rs 50,000 as the last-drawn salary will get an estimated gratuity of Rs 2,59,615.