Gratuity Calculator: 9 years of service and Rs 50,000 as last-drawn basic salary; what will be your gratuity; see details
Gratuity Calculator: Public and private sector employees who have completed 5 years of service are eligible to get gratuity from their employer. The gratuity amount of an employee is calculated on the basis of their last-drawn basic salary and the years of service.
Know Your Gratuity Amount: Employees who work for a long time in an organisation should be rewarded for their loyalty for sticking to the company through thick and thin. One of the prominent ways to reward the employee is gratuity, which, as per the Payment of Gratuity Act, 1972, an employer is mandated to give to their employees on completion of 5 years of service. This is appreciation in terms of money to employees for their long-term dedication and allegiance to the company. It also motivates new employees to stay with the company for a long period. The gratuity amount depends on the last-drawn basic salary and the years of service of an employee. In this write-up, know what the gratuity amount will be for an employee who is exiting an organisation after 9 years of service and with a basic last-drawn salary of Rs 50,000.
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Which organisations are eligible to provide gratuity?
As per the Gratuity Act, employers need to provide gratuity to the employees working in every factory, mine, oilfield, plantation, port, railway company, shop, or establishment in which 10 or more persons are employed, or were employed, on any day of the preceding 12 months.
Which organisations are eligible to provide gratuity?
Along with that, employees working in other establishments or classes of establishments in which 10 or more employees are employed, or were employed, or, any day of the preceding 12 months, as the Central Government specification, are also eligible to get gratuity from their employer.
Which organisations are eligible to provide gratuity?
Once a shop or establishment comes under the Gratuity Act, it will remain under it forever, even if the number of employees falls below 10.
When can an employee receive gratuity?
An employee becomes eligible for gratuity on the termination of their employment after they have rendered continuous service for at least 5 years, on retirement or resignation, superannuation, or their death or disablement due to accident or disease.
How is the gratuity amount decided?
The amount of gratuity is decided on the basis of the last drawn basic salary and the years of service an employee has rendered.
How is the gratuity amount decided?
The gratuity amount can be different for two people with the same tenure of service but with different last-drawn salaries.
How gratuity is calculated
The formula to calculate the gratuity amount is = (Last drawn basic salary) X (Number of years in employment) X (15/26)
How gratuity is calculated
As per gratuity rules, 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 wages based on the rate of wages last drawn by the employee. On the other hand, 26 is the number of working days in a month after excluding Sundays.
What will be the gratuity amount on Rs 50,000 monthly salary?
Since we are calculating the gratuity for an employee with Rs 50,000 as the last drawn basic salary and 9 years of service, the gratuity amount will be = Rs 50,000X9X15/26= Rs 2,59,615.38.