Know Your Gratuity: Rs 37,000 as last-drawn basic salary and 6 years and 1 month of service; what will be your gratuity amount?
Gratuity Calculator: Companies following the Payment of Gratuity Act, 1972, are mandated to provide gratuity to their employees with uninterrupted service of 5 years. The last drawn salary and the number of service years are the criteria to calculate the gratuity of an employee.
Gratuity Calculator: Employees with 5 years of uninterrupted service are eligible to get gratuity from their employers. Gratuity is a kind of incentive provided to the employees for their allegiance and long-duration service rendered to the organisation. Every company following the Payments of Gratuity Act, 1972, needs to follow the mandate of providing gratuity to their employees. What are other criteria? When does an employee become eligible to get gratuity? What will be the gratuity of an employee with Rs 37,000 as the last drawn basic salary and 6 years and 1 month of service? Know these answers in this write-up.
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How will you know that your organisation pays gratuity?
Organisations that follow the Payment of Gratuity Act, 1972, are required to provide gratuity to their employees. But how will you know which these companies are?
How will you know that your organisation pays gratuity?
As per the Act, employees who are working in a mine, factory, railway company, port, oilfield, shop, plantation, or establishment where 10 or more persons are employed or were employed on any day of the preceding 12 months are eligible for gratuity.
Are there other conditions to provide gratuity?
Employees working in establishments or classes of establishments where 10 or more employees are employed, or were employed, on any day of the last 12 months, as per the Central Government specification, are also eligible to get the gratuity amount.
What if your company move out of Payment of Gratuity Act?
It's not possible. If a company comes under the Act, it needs to provide gratuity to its employees, and it can't move out of the Act.
What are conditions to get gratuity?
An employee can get gratuity at the time of their resignation, superannuation, retirement, termination, or disablement. If the eligible person for gratuity dies, their family members receive the gratuity amount.
How will your service years be counted?
The basic condition is to have 5 years of uninterrupted service. After that, a minimum six-month period will be calculated as a full year.
Examples of service years
E.g., if someone has completed 5 years and 6 months of service, it will be counted as 6 years, but if someone has completed 6 years and 5 months of service, it will be counted as 6 years.
How is gratuity calculated?
The number of years of service and the last-drawn basic salary are the factors to calculate the gratuity of an employee.
Gratuity calculation formula
Gratuity = (Last Drawn Salary x Number of Years of Service) X 15/26
Here, 15 refers to 15 days’ wages per year, which is the gratuity payable.
26 refers to 30 days in a month excluding Sundays.
Gratuity calculation for Rs 37,000 as last-drawn salary and 6 years and 1 month of service
In the above-given conditions, the estimated gratuity amount will be Rs 1,28,077.