I will make it more clear that:-
The organisation is covered under the shops & establisment Act by its nature of business.
Off course Gratuity will be calculated under the payment of gratuity Rules, 1973.
The calculation of Gratuity should be different based on the establishment whether it is covered under the Factory Act or S&E Act.
Basic * 15 / 26 * years = Gratuity not more than 3.5 lacs
Basic = Last Drawan Basic
15 = Halof of Basic
26 = 26 working days in a month
Year = Year of serivce which should be more that 5 years of continous employment
Just one correction 15 is not half of basic It is the number of days
An employee is eligible for 15 days of wage per year of completed service if he comp0letes 5 years
One day wage is calculated as per the Supreme Courts observation dividing the Basic +Da by 26 days.
That is how thge formula Last drawn basi+Da*15*Number of years of service/26
i have a point
an establishment started with 4 employees and in the 4th year there were 7 employees. in the middle 4th year the no of employees raised to 12.
Now my point is
Whether the no of years for calculation of gratuity will be counted from the date of joining of employee no 1 who is still in service or from the date act become applicable to the establishment.
"Section 4(3) of the Payment of Gratuity Act provides for the upeer ceiling of the amount payable as gratuity to an employee. In case however the employees can obtain better terms of gratuity from their employer under any award/agreement/contract from an earlier date, higher amount of gratuity is possible. There should not be any bar on any establishment/employer to provide better terms of gratuity from an earlier date. If any PSU has allowed higher gratuity from a retrospective date without such contract/agreement, such decision is not covered under the provision of the Act. Such violation of law does not call for amendment of the Act." Unquote. The interpretation of rule by parliament is like this.
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