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Gratuity Calculation - Leave Encashment

sonali.bagdare Started The Discussion:

Hi All,
I am Sonali.
I just gone through many sites to search for the exact formula for calculation of Gratuity, but still confused some are giving it like
[(Basic+da)/26]*15*no. of Yrs worked

some are giving it like
{[(Basic+da)*15]/26} * no. of Yrs worked

which one is correct n i also want to know the logic for this formula as well the basis +da is yearly or Monthly.

Dhruvin Sureliya - Contributing Member
hi i think second one is correct and if you have any doubt refer to labour act Regards Dhruvin

SSrinath - 
Hello Sonali

First formula is correct.

Gratuity is calculated / paid for 15 days for every year of service completed.

So, first you need to divide the salary (basic & da) with total days of the month which gives you rate/day. then multiply it with 15 and no. of years completed.

Hope it is clear to you

regards
srinath

sumitk.saxena - Contributing Member
hi sonali,
the formula is last drawn salary (basic+da) / 26 * 15 *year of service.
for any encashment e.g bonus calculation, leave encashment, deduction of epf, gratuity payment etc the component of basic salary +dearness allowance is consider rather than gross salary, 26 are the working days instead of 30 or 31 days, 15 is the figure for 15 days salary of each year and if year of service is 5 year or more than eligiblity for payment of the same will be possible. i think most of your doubt will be cleared now.
thanks & regards,
from,
sumit kumar saxena,
+91-9899669071, 0120-4131277

mallet - Contributing Member
(Moneycontrol Wealth Calculator List Gratuity calculator) at http://wealth.moneycontrol.com/jtgratuity.php This link is helpful

bhaskarde - 
The formula is basi +da divided by 26 multiplyed by 15 multiplied by no of yrs. completede . If some one crosses 6 months then it would be calculated for the next yr . Madras highcourt have given a verdict that gratuity shall be calculated in 4 yrs 8 months

benance - Contributing Member
Dear, Both the formulas are correct and on application u will get same result... Regards, Sesar

suyoglabourconsultants - Contributing Member
Dear sonali interpretation of sumitkumar saxena is perfect and as per the provisions of the payment of gratuity act, plz. Follow the same, kiran kale, kolhapur.

Dear

Basic & DA have to be taken as salary for gratuity calculation, if you take the gross salary it is more than the statutorily prescribed rate which will set as precedent.

the salary ie basic + da has to be divided by 26 to arrive one day salary which has to be multiplied by 15 then by no of years of service rendered. 5 yrs 6 months have to be taken as 6 years.

if any further clarification required, please do mail me.

C Manimaran


ppj134 - 
Dear Sonali,

I was also a same doubt in my mind few days back and also like u I went thru many sites and yes got confused....but after a discussion with a senior and yes experienced (more than 20yrs) HR professional he said that following formula is correct and also simple to calculate;

-[(Basic+da)/26]*15*no. of Yrs worked

I used it on trail basis and it is really gud and simple....now I am using it on regular basis......It is useful..

Regards,

Prashant

Quote:
Originally Posted by sonali.bagdare View Post
Hi All,
I am Sonali.
I just gone through many sites to search for the exact formula for calculation of Gratuity, but still confused some are giving it like
[(Basic+da)/26]*15*no. of Yrs worked

some are giving it like
{[(Basic+da)*15]/26} * no. of Yrs worked

which one is correct n i also want to know the logic for this formula as well the basis +da is yearly or Monthly.

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