Please advise the correct amount for the calculation of gratuity.
Is it basic plus DA? In absence of a DA component in the payslip, any other amount i.e house allowance/special allowance/conveyance etc or anyone from the above may be considered for calculating Gratuity
From India, Calcutta
Is it basic plus DA? In absence of a DA component in the payslip, any other amount i.e house allowance/special allowance/conveyance etc or anyone from the above may be considered for calculating Gratuity
From India, Calcutta
It is basic + DA that is to be considered for computing gartuity. All other allowances are excluded.However please note, if your paying any allowance like special allowance which is linked to cost of living, that may have to be included.
B.Saikumar
HR& Labour Law advisor
Mumbai
From India, Mumbai
1898B.Saikumar
HR& Labour Law advisor
Mumbai
From India, Mumbai
Hi My employer have settled my gratuity based on basic salary only. There is no heading as DA in my salary slip. Can I take legal action to claim gratuity on special allowance. regards Arbindsha
From India, Calcutta
From India, Calcutta
Dear Arbind
Every special allownce paid as component of salary will not be in the nature of dearneallownace. In private sector, special allowance is paid as any other allowance apart from basic but not as dear allowance. Therefore, it may not rank for calculating gratuity. However special allowance paid as part of minimum wages, notified by State Government will be in the nature of dear allowance as it is linked to cost of living index.Similarly certain PSU banks pay special allowance to the employees for carrying out some special duties and it is part of the agreement between unions and the banks to include it for the purpose of computing dearness allowance/HRA etc and for retiral benefits like gratuity. I do not think your case falls under any of these cases.
B.Saikumar
Mumbai
From India, Mumbai
Every special allownce paid as component of salary will not be in the nature of dearneallownace. In private sector, special allowance is paid as any other allowance apart from basic but not as dear allowance. Therefore, it may not rank for calculating gratuity. However special allowance paid as part of minimum wages, notified by State Government will be in the nature of dear allowance as it is linked to cost of living index.Similarly certain PSU banks pay special allowance to the employees for carrying out some special duties and it is part of the agreement between unions and the banks to include it for the purpose of computing dearness allowance/HRA etc and for retiral benefits like gratuity. I do not think your case falls under any of these cases.
B.Saikumar
Mumbai
From India, Mumbai
Dear Saikumar,
Thanks a lot for your valuable comments. It is indeed very helpful.
Only thing I would like to add that this special allowance was given throughout our employment and to all employees. DA was never in the heading of our pay slip.
i.e basic pay 35k hra15k special allowance 22k others 8k
holding a senior mgr level.
best regards
Arbind
From India, Calcutta
Thanks a lot for your valuable comments. It is indeed very helpful.
Only thing I would like to add that this special allowance was given throughout our employment and to all employees. DA was never in the heading of our pay slip.
i.e basic pay 35k hra15k special allowance 22k others 8k
holding a senior mgr level.
best regards
Arbind
From India, Calcutta
Dear Mr. Arbind,
The special Allowance in your case should be construed as DA as 17@ of the salary package mentioned by you should be deary the cost of living ( even though there was no mechanism to arrive at this figure as in the case of unionized employees who are enjoying the Dearness allowance based on the mechanism of local cost of living /All India consumer price as the case may be,
The allocation of major portion of gross salary in the name of Special Allowance may be to circumvent the definition of salary under payment of gratuity act 1972 in as much as to lessen the employers financial commitment to gratuity to employees specially senior executives in management cadre . It is understandable that and logically tenable to allocate reasonable portion( %) of gross salary into HRA ( up to 50%) , Conveyance Allowance , City compensatory allowance, Dress/washing allowance etc etc. Bereft of all these allowance , a single component styled as Special Allowance with considerable percentage of gross salary is a point at dispute .
The issue reckoning of Special Allowance as part of salary in addition to Basic Salary has to be taken up with controlling Authority under payment of gratuity act 1972 for a final decision, If the Contorting authority negatively your representation , then the issue to be taken with Appellate Authority. There is strength in your case . The employer cannot take to interpretation of salary definition on the basis of the just letters of the payment of the gratuity act 1972 . In fact it should be taken into spirit and logical conclusion and I am sure the Courts can view this social security legislation in a more pragmatic ,logical and analytical manner and you have bright chances of success. I am not in position to lay my hands on judicial pronouncement / case law in this regard .
Let other experts through lights in this regard.
From India, Chennai
The special Allowance in your case should be construed as DA as 17@ of the salary package mentioned by you should be deary the cost of living ( even though there was no mechanism to arrive at this figure as in the case of unionized employees who are enjoying the Dearness allowance based on the mechanism of local cost of living /All India consumer price as the case may be,
The allocation of major portion of gross salary in the name of Special Allowance may be to circumvent the definition of salary under payment of gratuity act 1972 in as much as to lessen the employers financial commitment to gratuity to employees specially senior executives in management cadre . It is understandable that and logically tenable to allocate reasonable portion( %) of gross salary into HRA ( up to 50%) , Conveyance Allowance , City compensatory allowance, Dress/washing allowance etc etc. Bereft of all these allowance , a single component styled as Special Allowance with considerable percentage of gross salary is a point at dispute .
The issue reckoning of Special Allowance as part of salary in addition to Basic Salary has to be taken up with controlling Authority under payment of gratuity act 1972 for a final decision, If the Contorting authority negatively your representation , then the issue to be taken with Appellate Authority. There is strength in your case . The employer cannot take to interpretation of salary definition on the basis of the just letters of the payment of the gratuity act 1972 . In fact it should be taken into spirit and logical conclusion and I am sure the Courts can view this social security legislation in a more pragmatic ,logical and analytical manner and you have bright chances of success. I am not in position to lay my hands on judicial pronouncement / case law in this regard .
Let other experts through lights in this regard.
From India, Chennai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Gratuity calculation.doc
Gratuity Calculation tool.xls