Calculation of Gratuity under Shops & Establishment Act
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Calculation of Gratuity under Shops & Establishment Act

prasadkashinath Started The Discussion:

For the purpose to calculate Gratuity under the shops & establishment act, what should be minimum service length and the salry, whether basic or gross.

Kashi

I will make it more clear that:-

The organisation is covered under the shops & establisment Act by its nature of business.
And
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.

vasu_hr - Member Since: Jan 2008
Dear Friend Gratuity is paid under Grtuity act not shops and establishment act Minimun he should have been worked 5 years cotinously in an organisation. Vasanth

shiva786 - Member Since: Feb 2007
Hi - Agreed with Vasu that Gratuity is paid as per Gratuity Act and not as per shop and establishment act however below is the formula for calculation of Gratuity

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

Rgds
shiva

tsivasankaran - Member Since: Dec 2007
Shiva

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

Siva

shiva786 - Member Since: Feb 2007
Hi - Agreed with Vasu that Gratuity is paid as per Gratuity Act and not as per shop and establishment act however below is the formula for calculation of Gratuity

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

Rgds
shiva

tsivasankaran - Member Since: Dec 2007
Shiva 15 is not half the wages It represents 15 days per year of service 26 represents a month as decided by the supreme court Siva

U.K.Singh - Member Since: Jan 2008
DA is also included in the basic for calculation of Gratuity. If the total service is 35 years then upto 30 years the above formula including Da is OK but for remaining five years gratuity is calculated taking into account one month salary for five years (in excess of 30 years). If the amount calculated is more than Rs.3.5 lakhs it is limited to 3.5 lakhs only. But when it falls below 3.5 lacks it will be as per actual. Gratuity is paid once in a whole period of service only after separation from the service.

R G NAGENDRA - Member Since: Jan 2008
Hi Mr. Siva from chennai has answered correctly and I fully agree with him. regards R G NAGENDRA

Z S DABAS - Member Since: Dec 2005
Dear All,

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.

regards

Dabas

tsivasankaran - Member Since: Dec 2007
Mr Singh I saw your posting on gratuity as under If I am permitted to interfere, I do not think there is any such provision in the Act I will be thankful if you could throw some light on this Siva



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