Dear All,
I came to known there are two acts regarding Gratuity 1971 and 1972; which act can I follow for my employees?
one of employees who completed 5.2 years and submitted resignation, how can I pay gratuity?
Some one says that Last month drawn gross salary is equivalent to gratuity? is it correct? (or) any other formula?
Kranthi Kumar.B

22nd October 2009 From India, Hyderabad

Labour Laws & Ir
Hr-operations, Payroll, Performance Appraisal,
Recruitment, E.s.i. & P.f
Hr Executive
+5 Others

Dear Kranthi Kumar,
the Gratuity Act for India is 1972 only and the last month drawn salary is not equal to the gratuity amount if the Employee is having more than 5 years of experience in the same organization continuously then he is eligible to get the gratuity amount and gratuity formula is
Calculation of Gratuity
Gratuity is calculated at 15 days wages last drawn by the employee for each completed
year of service. The monthly wage is divided by 26 and multiplied by 15. In computing a
completed year of service the period in excess of six months shall be taken as a full year.
Gratuity = Monthly salary x 15 days x No. of years of service
Maximum amount of Gratuity payable
The maximum amount of gratuity payable under the Act is Rs. 3,50,000.00.
Forfeiture of Gratuity
22nd October 2009 From India, Hyderabad
its not gross its basic wage Gratuity= Basic/26*15*Number of Years Minimum eligible is 4 years 270 days
24th October 2009 From India, Pondicherry
Dear Kranthi Kumar,
Good Morning !!!
Please find the below mentioned Gratuity formula, employee has completed 5year 7month of service the period so will be taken 6year.
Gratuity = Basic pay*15/26*Year
Thanks & Regards,
Umamaheswaran D

24th October 2009 From India, Madras
Gratuity Act-1972 is followed.As per this act ,the eligibility is minimum service of 5 continuous years. Calculation of Gratuity includes
Last drawn basic+DA+Special Allowance, if any(in special allowance only the portion of which is heading to PF) is considered. The total of these components is multiplied by 15 and devided by 26. The sum arrived at is multiplied by the total number of years of continuous service.The remainder of the service is in excess of 6 months then it is considered to be a full year for calculation of Gratuity.
24th October 2009 From India, Mumbai
Hi priya,
your formula is right.
but, eligibility for gratuity is continuous service is 5 years. means 4 years 240 days. one year completed means, the employee should work in that organisation 240 days.
24th October 2009 From India, Visakhapatnam
Dear All, Please find the enclosed Details for Payment of Gratuity
24th October 2009

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File Type: zip thepaymentofgratuityact1972apracticalapproach.zip (248.7 KB, 315 views)
The formula for Gratuity calculation is:
Basic + DA + IR(interim relief) if any X 15 X No. of yrs of service
Please note the person should have been completed 5 years in service. 5 yrs plus 6 month should be considered as 6 yrs for the calculation.
If covered unde Journalist Acts the period should be 10 years.
Hope this will suffix your requirement.
Please note for calculation of Retrenchment the same formula is used by the difference is Gross salary is taken into consideration against Basic + DA + IR.
25th October 2009 From India, Patna
As u said in ur posting that 3 components are considered for gratuity calculation viz. Basic+D.A.+Special allowance. Can u give me any documentary evidence(notification or court judgement) of special allowance to be considered for grauity. During my final settlement with my previous employer s.a was not considered for gratuity. This will help me claim my demand with my previous employer.
8th November 2009 From India, Mumbai
Dear Kranthi Kumar.B,
Plz go through the applicability clause in both of the Acts & then decide whichever is applicable in your case. If both the Acts are found applicable then apply the formula for grant of gratuity which have better terms in this case.

8th November 2009 From India, Delhi
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