Gratuity Calculator: Rs 37,000 as last-drawn salary; 6 years and 3 months as service period; know your gratuity?
Discover what will be your gratuity amount with Rs 37,000 as the last-drawn salary in the service period of 6 years, and 3 months. Understand the calculation to estimate your retirement benefit accurately.
Gratuity is an amount given to an employee as a reward for their continuous service. However, an employee is entitled to gratuity only after 5 years of uninterrupted service. The amount of gratuity is given to the employee at the time of leaving the job or at the time of retirement based on their service period. However, in some situations, the company can also stop the gratuity of the employee if it wants to. Here, we will discuss what will be the gratuity of an employee with Rs 37,000 as the last-drawn basic salary and 6 years and 3 months of service.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is gratuity?
Gratuity is the amount that the employer pays to their employees for their long service to the company. The payment is made in a lump sum to the employee only after completing 5 years of service. Gratuity is governed by the Payment of Gratuity Act, 1972. In case the eligible candidate dies, their family member receives gratuity.
Length of service
The employees must have completed continuous 5 years of service. This includes service that is uninterrupted by leave, accident, sickness, lockout, strike, layoff, or absence from duty without leave.
What are the eligibility criteria for gratuity?
To be eligible for gratuity, employees must have uninterrupted 5 years of service in an organisation.
The organisation must come under the Payment of Gratuity Act, of 1972.
Other conditions in which one can get gratuity?
Gratuity is payable not only at the time of retirement but also in various situations. Such as:
Superannuation
Termination
Resignation
Death or disablement
Organisational criteria for gratuity
Organisations employing 10 or more individuals over the past years and following the Payment of Gratuity Act, of 1972, are required to pay gratuity.
How service years are counted
One needs to complete at least 5 years of uninterrupted to get gratuity. But after, if someone has completed 6 months of service, it will be counted as a full year.
What are the factors that determine the gratuity amount?
The number of years and the last-drawn basic salary of an employee can be used to calculate the gratuity amount.
Can a company opt out of the Payment of Gratuity Act?
If a company falls under the Payment of Gratuity Act, 1972, it cannot count itself out.
Formula to calculate gratuity
(Last Drawn Salary x Number of Years of Service) X 15/26
Here 15 refers to 15 days’ wages per year, and 26 refers to 30 days in a month excluding Sundays.
Gratuity calculation for Rs 37,000 as last-drawn salary and 6 years and 3 months of service
The estimated gratuity amount of the individual will be Rs 1,28,077.