Dear All,
I have a doubt that is it compulsory to complete five years for becoming eligible for gratuity.
also for gratuity calculation, pls confirm, is the below formula correct??
basic salary*15/26*no of years Service
Thanks & regards,
Prakash rawat

From India, Gurgaon

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Dear Prakash Ji, Gratuity actual calculate is - 15/26*no of service year and month*basic salary
From India, Bhopal
Hi all can you provide payroll proceess QC template in Excel Regards, manjuanth 9743481431
From India, Bangalore
Calculation of Gratuity as per Sec. 4 of the Gratuity Act is as under-
Monthly Salary (Basic+DA) /26 *15*no of years of service = Amount of Gratuity payable (Must not Exceed to Rs. 10 lakh)
Yes, as per sec. 4 of the Act, minimum qualifying period is 5 years.

From India, Delhi
Gratuity is applicable only to Basic and Dearness allowance of the employee.
To calculate the gratuity. A month salary+DA divided by 26 days (i.e. month)x no of years service completed.
Qualifying period 5 years

From India, Coimbatore
Dear Mr.Prakash,
Gratuity eligibility comes after continuous 05(five) years of service. The five year service means the 4 year and 240 days of the 5th year i.e. 04 year 10months and 18 days. But at the time of calculation if there is more than six months or part thereof will be considered as one year.
Please find enclosed judgment, hope that will serve you purpose.
With Regards,
Sandip Saha

From India, Kolkata

Attached Files (Download Requires Membership)
File Type: pdf Gratuity Judgement for 240 days.pdf (1.55 MB, 1221 views)

to avail gratuity 5 yrs of service for regular employees 160 days in mines 240 days for seasonal employees the max amount can be given is 3,50,000.
for monthly employee the calculation is :
last drawn wages / 26* 15* no. of years of service completed.
in case of mines / piece rated employees :
avg.wages /26*15* no of years completed.
for seasonal employees:
7 days of wages for every completed year of service .

From India, Madras
it can exceed 10 lakhs, there is no margin on that, its that if it crosses 10 lkhs, then it becomes taxable.
From India, Calcutta
Dear Prakash,

Mr P K Jain has rightly descibed the formula for calculation of Gratuity. However, I would like to throw some light on eligibility for Gratuity entitlement in the fifth year.

The gratuity eligibility as per Gratuity Act 1972 is 5 years of continuous service. Sub Section (2) of Section 4 of Gratuity Act, 1972 is for calculation of gratuity and not for the eligibility of gratuity.

But as per the judgment of the Supreme Court, an employee is eligible for gratuity if he has completed 4 years of continuous service and 240 days continuous working in 5th year. On the day when he completes his 240 days in the 5th year he will be eligible for gratuity.

The judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal, [(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act is synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10 months and 11 days is considered to have completed 5 years continuous service under Sub Section (2) of Section 4 and thereby is eligible for gratuity."

Now almost all organizations are paying gratuity if an employee has completed 4 years of continuous service and 240 days continuous working in the 5th year.

There is one more judgment as delivered by the Madras High Court on the eligibility of gratuity is as under :

Hon’ble Justice Mr. S.M. Abdul Wahab J. (W.P. No. 2135 of 1987) gave his verdict on 12.6.1996 in the case betwee Mettur Beardse Ltd., Madras and Regional Labour Commissioner (Central), (Authority under Payment of Gratuity Act) & Others (1998 LLR 1072).

Thus an employee who has put in service for 10 months and 18 days for the fifth year subsequent to first 4 years should be deemed to have completed continuous service of five years. His claim for gratuity is tenable.


Rakesh Pd Srivastav

From India, Gurgaon
While paying gratuity ''continuous services'' should be considerted as per its definition given in the Act.Thus if an employee dies while in service, gratuity is payable to him,even though he has not completed five years of continuous service.
From India, Delhi

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