Gratuity Calculator: Rs 38,000 as last-drawn basic salary, 5 years and 5 months of service; what will be gratuity amount?
Gratuity Calculator: Employees with at least 5 years of uninterrupted service are eligible to get gratuity in the companies that come under the Payment of Gratuity Act, 1972. Such employees' last-drawn salary and the number of years of service are considered to calculate gratuity.
Gratuity Calculator: Organisations that come under the Payment of Gratuity Act, 1972, need to provide gratuity to their employees. This is a kind of reward to the employees for their allegiance and the number of years of service they have rendered to the company over the years. The minimum criteria to be eligible to get gratuity is the uninterrupted service of 5 years. Know who is eligible to get maturity, which organisations need to provide maturity, which factors determine the gratuity amount, and what is the formula to calculate the gratuity amount.
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Does your organisation pay gratuity?
Before knowing that, let's go through the conditions for organisations mandated to provide gratuity to their employees. Organisations that follow the Payment of Gratuity Act, 1972, are required to provide gratuity to their employees.
Does your organisation pay gratuity?
The Act says that employees working in a mine, factory, oilfield, railway company, port, plantation, shop, or establishment where 10 or more persons are employed or were employed on any day of the preceding 12 months are eligible to get gratuity from their employer.
Which organisations should provide gratuity?
Other than the above-mentioned condition, employees working in establishments or classes of establishments where 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 to receive gratuity.
In what conditions can one get gratuity?
An eligible person can get gratuity at their resignation, retirement, superannuation, termination, or disablement. If the eligible candidate dies, their family member receives gratuity.
Can a company opt out of Payment of Gratuity Act?
If a company comes under the Act, it cannot move out.
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.
Examples of service years
E.g., if someone has completed 7 years and 1 month of service, it will be counted as 7 years, but if someone has completed 8 years and 6 months, it will be counted as 9 years.
Factors that determine gratuity amount
The number of years and the last-drawn basic salary of an employee can be used to calculate the gratuity amount.
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 38,000 as last-drawn salary and 5 years and 5 months of service
The estimated gratuity amount for such a person will be Rs 1,09,615.